M/S SHREE JAIRAM EDUCATION SOCIETY, Bhopal V. Pr. CIT (Central), Bhopal

ITA 90/Ind/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 3640 (ITAT-INDORE)
• Duration Of Justice: 2 year(s) 8 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-10-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 05-08-2021
• Assessment Year: misc
• Appeal Filed On: 06-02-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S S MANTRI
• Assessee Lawyers: GIRISH AGRAWAL; NISHA LAHOTI A RS
• Keywords: Capital asset; Business income; Depreciation; Search and seizure; Loose papers; Document seized; Charitable institution; Opportunity of being heard; Diversion of income; Source of fund; Retrospective amendment; Question of law; Corroborative evidences; Benefit of exemption; Cancellation of registration; Documents seized; Capital expenditure; Borrowed satisfaction; Set aside
• Section: 143(3); 142(1); 133A; 153A; 234B; 12A; 12AA; 250; 201; 274; 143(2); 207; 64; 43; 48; 73; 13; 22; 153C; 147; 27; 148; 37; 132; 12; 28

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE HONBLE RAJPAL YADAV, VICE PRESIDENT AND SHRI MANISH BORAD, ACCOUNTANT MEMBER VIRTUAL HEARING ITA NOS.90 & 548/IND/2019 ASSESSMENT YEAR: 2010-11 SHRI JAIRAM EDUCATION SOCIETY BHOPAL PAN:AACAS9908E : APPELLANT V/S PR. CIT(CENTRAL)/ACIT(CENTRAL)-II BHOPAL : RESPONDENT APPELLANT BY SHRI GIRISH AGRAWAL & MS. NISHA LAHOTI, ARS REVENUE BY SHRI S.S. MANTRI, CIT-DR DATE OF HEARING 05.08.2021 DATE OF PRONOUNCEMENT 13.10 .2021 O R D E R PER MANISH BORAD, A.M THE ABOVE CAPTIONED APPEALS FILED AT THE INSTANCE OF THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF LD. PR. COMMISSIONER OF SHRI JAIRAM EDUCATION SOCIETY ITA NO.90 & 548/IND/2019 2 INCOME TAX (IN SHORT PR. LD. CIT],-(CENTRAL)-3 BHO PAL DATED 28.11.2018 & 05.03.2019 WHICH ARE ARISING OUT OF TH E ORDER U/S 12AA(3) AND 12AA(4)/147 R.W. S.143(3) OF THE INCOM E TAX ACT 1961(IN SHORT THE ACT). 2. AS THE ISSUES RAISED IN THESE APPEALS ARE MOSTLY COMMON AND RELATE TO SAME ASSESSEE, AT THE REQUEST OF ALL THE PARTIES THESE APPEALS WERE HEARD TOGETHER AND A RE BEING DISPOSED OF BY THIS COMMON ORDER FOR SAKE OF CONVENIENCE AND BREVITY. 3. BRIEF FACTS OF THE CASE AS CULLED OUT FROM THE R ECORD ARE THAT THE ASSESSEE IS A CHARITABLE SOCIETY REGISTERED UNDER T HE M. P. SOCIETIES REGISTRATION ACT, 1973 SINCE 28.11.2016. THE OBJECT OF THE SOCIETY IS IMPARTING EDUCATION. TRINITY INSTITU TE OF TECHNOLOGY AND RESEARCH (INSTITUTE) IS THE COLLEGE ESTABLISHED UNDER THE ASSESSEE SOCIETY. THIS COLLEGE IMPARTS EDUCATION BY OFFERING VARIOUS COURSES WHICH INCLUDE BACHELOR OF ENGINEERI NG IN VARIOUS BRANCHES LIKE CIVIL ENGINEERING, MECHANICAL ENGINEE RING, ELECTRONICS AND TELECOMMUNICATION ENGINEERING, COMP UTER SCIENCE AND INFORMATION TECHNOLOGY. THIS INSTITUTE ALSO OFFERS COURSES FOR MBA AND M.TECH. A SEARCH AND SEIZURE AC TION U/S 132 OF THE ACT WAS CONDUCTED AT THE VARIOUS PREMISE S OF THE SHRI JAIRAM EDUCATION SOCIETY ITA NO.90 & 548/IND/2019 3 RAMANI GROUP AND ASSOCIATES, BHOPAL ON 30 TH AUGUST,2016. DURING THE COURSE OF SEARCH, MANY DOCUMENTS/LOOSE P APERS PERTAINING TO THE ASSESSEE SOCIETY NAMELY LPS-6, LP S-7, AND LPS- 11 WERE FOUND. THEREAFTER NOTICE U/S 148 OF THE ACT DATED 29.11.2017 WAS SERVED UPON THE ASSESSEE FOLLOWED BY SERVING OF NOTICES U/S 143(2) & 142(1) OF THE ACT ALONG WITH Q UESTIONNAIRE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASS ESSEE WAS CONFRONTED WITH THE SEIZED MATERIAL AND AFTER CONSI DERING THE SUBMISSIONS OF THE ASSESSEE ASSESSMENT WAS COMPLETE D ON 29.12.2017, ASSESSING THE INCOME AT RS. 286,69,615/ - TREATING THE ASSESSEE TO BE CARRYING ON BUSINESS AND NOT CHA RITABLE ACTIVITY. INCOME OVER EXPENDITURE SHOWN IN THE PROF IT AND LOSS ACCOUNT AT RS. 1,96,50,937/- WAS TREATED AS BUSINE SS INCOME AND FURTHER BASED ON THE SEIZED DOCUMENTS ADDITIONS FOR BOGUS EXPENSES ON SALARY AT RS.20,48,173/- WERE DISALLOWE D U/S 37 AND ALSO ADDITION OF RS.69,70,505/- WAS MADE FOR UNEXPL AINED MONEY ON ACCOUNT OF BUSINESS RECEIPTS. THE ASSESSEE CHALL ENGED THE ACTION OF THE LD. AO BEFORE LD. CIT(A) RAISING VARI OUS LEGAL GROUND AS WELL AS CHALLENGING THE ADDITIONS BUT PARTIALLY SUCCEEDED. 4. IN THE MEANTIME, SINCE THE ASSESSEE WAS PART OF THE RAMANI GROUP, ALL THE CASES OF THIS GROUP INCLUDING THE AS SESSEE WERE SHRI JAIRAM EDUCATION SOCIETY ITA NO.90 & 548/IND/2019 4 TRANSFERRED TO ACIT-(CENTRAL)-2 BHOPAL WHICH COMES UNDER THE JURISDICTION OF PR. CIT-(CENTRAL). LD. PR. CIT(CENT RAL) BASED ON THE SEIZED DOCUMENTS LPS-6, LPS-7 & LPS-11 AND OTHER IN FORMATION COMMENCED THE PROCEEDINGS U/S 12AA(3) AND 12AA(4) O F THE ACT AND ASKED THE ASSESSEE THAT WHY NOT THE REGISTRATIO N U/S 12AA OF THE ACT ISSUED TO THE ASSESSEE SHOULD BE CANCELLED, AS THE ASSESSEE SOCIETY WAS FOUND TO BE NOT CARRYING OUT A FFAIRS OF THE TRUST IN A GENUINE MANNER, AND THAT THE FUNDS OF TH E TRUST ARE BEING USED FOR THE BENEFIT OF THE MEMBERS OF THE TR UST. DURING THE PROCEEDINGS THE ASSESSEE MADE DETAILED SUBMISSIONS REBUTTING THE CHARGES LEVELED AGAINST IT BUT WAS NOT ABLE TO SUCCEED AND THE REGISTRATION U/S 12AA OF THE ACT WAS CANCELLED WITH RETROSPECTIVE EFFECT FROM 01.04.2008. 5. NOW BEFORE US ASSESSEE HAS FILED TWO APPEALS. TH ROUGH ITANO.90/IND/2019 ASSESSEE HAS CHALLENGED THE FINDI NG OF LD. PR. CIT(CENTRAL) VIDE ORDER DATED 29.11.2018 FRAMED U/S 12AA (3) AND 12AA(4) OF THE ACT RAISING FOLLOWING GROUNDS: 1. THAT ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE FINDINGS OF THE PR. CIT IN INVOKING THE PR OVISIONS OF SUB- SECTION (3) & (4) OF SECTION 12AA FOR WITHDRAWING/CANCELLING THE REGISTRATION U/S.12AA OF THE ASSESSEE ARE WHOLLY UN LAWFUL, ARBITRARY, UNREASONABLE AND PERVERSE AND, THEREFORE , SUCH UNLAWFUL, UNJUSTIFIED, ARBITRARY, UNREASONABLE AND PERVERSE FINDINGS BE QUASHED AND THE ORDER OF THE PR. CIT, WITHDRAWING/CANCELLING REGISTRATION BE CANCELLED. SHRI JAIRAM EDUCATION SOCIETY ITA NO.90 & 548/IND/2019 5 (2) THAT ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED PR. CIT ERRED IN WITHDRAWING/CANCE LLING THE ASSESSEE'S REGISTRATION U/S.12AA AND THAT TOO WITH RETROSPECTIVE EFFECT FROM 01.04.2008. (3) THAT ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE FINDINGS OF THE LEARNED PR. CIT THAT, THE AFFAIRS OF THE ASSESSEE ARE NOT GENUINE AND ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS AND AIMS OF THE TRUST A ND THE FUNDS OF THE TRUST WERE BEING USED FOR THE BENEFITS OF THE M EMBERS OF THE TRUST, ARE WHOLLY WRONG, INJUDICIOUS, UNLAWFUL AND OPPOSED TO FACTS HENCE SUCH FINDINGS BE QUASHED AND THE ORDER OF THE LEARNED PR. CIT WITHDRAWING/CANCELLING THE REGISTRATION BE KINDLY CANCELLED. (4) THAT ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED PR. CIT IS WHOLLY WRONG AND INJUDI CIOUS IN HIS FINDINGS THAT THE PROVISIONS OF SECTION 13(L)(C)(II ) ARE APPLICABLE IN THIS CASE. SUCH FINDINGS BE QUASHED AND IT BE HELD THAT THE SAID PROVISIONS OF SECTION 13(1)(C)(II) ARE NOT APPLICAB LE AT ALL. THE ORDER OF THE LEARNED PR. CIT U/S.L2AA(3) AND 12AA(4) IS UNLAWFUL AND, THEREFORE, BE KINDLY CANCELLED. . (5) THAT ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THAT SECTION 12AA(4) WAS INSERTED W.E.F. 01.10 .2014 BY FINANCE (NO.2) ACT, 2014. THE SAID SECTION HAS NO R ETROSPECTIVE APPLICATION AND, THEREFORE, THE ORDER OF LEARNED PR . CIT IS UNLAWFUL AND BE QUASHED. (6) THAT ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE ACTIVITIES OF THE ASSESSEE ARE GENUINE AND ARE BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE T RUST AND, THEREFORE, THE PROVISIONS OF SECTION 12AA(3) ARE NO T APPLICABLE. HENCE THE ORDER OF PR. CIT IS UNLAWFUL AND, THEREFO RE, BE QUASHED. (7) THAT ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED PR. CIT ERRED IN HOLDING THAT :- (I) THAT THE ASSESSEE HAS PAID SALARY TO NON EXIST ING EMPLOYEES. (II) THAT THE EMPLOYEES OF THE ASSESSEE WERE PAID HIGHER SALARY BE CHEQUE AND THEREAFTER, DIFFERENCE AMOUNT IS REPAID BY THEM TO THE MEMBERS OF THE SOCIETY AND IN THIS WAY, FUNDS OF THE CHARITABLE TRUST WERE SIPHONED OUT AND USED BY THE MEMBERS OF THE CHARITABLE SOCIETY . (III) THAT ASSESSEE IS NOT SHOWING ITS ENTIRE INCO ME IN ITS HOOKS OF ACCOUNTS. THIS SHOWS THAT FUNDS OF THE CHARITABLE TRUST ARE B EING SIPHONED OUT AND USED SHRI JAIRAM EDUCATION SOCIETY ITA NO.90 & 548/IND/2019 6 BY THE MEMBERS OF THE CHARITABLE SOCIETY. (IV) THAT THE FEE RECEIPTS WERE NOT BEING FULLY RE FLECTED IN THE AUDITED ACCOUNTS, LEADING TO SIPHONING OF THE SAME AND THIS WAY THE FUNDS OF THE TRUST WERE MISAPPROPRIATING BY THE MEMBERS OF THE TRUST. ALL THE ABOVE FINDINGS ARE WHOLLY INCORRECT, INJUDI CIOUS AND UNLAWFUL AND, THEREFORE, THE SAME BE QUASHED AND IT BE HELD THAT THE PROVISIONS OF SECTION 12AA(3) AND 12AA(4) HAVE BEEN INJUDICIOUSLY AND UNL AWFULLY INVOKED. ALL THE FINDINGS, THEREFORE, BE QUASHED. THE ASSESSEE HAS FURTHER RAISED FOLLOWING ADDITION AL LEGAL GROUNDS ON 28.05.2021:- 1.ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, IMPUGNED ORDER DATED 29.11.2018 PASSED BY LD. PR. C IT(CENTRAL) BHOPAL AND THE SHOW CAUSE NOTICE DATED 02.04.2018 I SSUED BY THE LD. PR. CIT(CENTRAL) BHOPAL BOTH ARE BAD IN LAW , INVALID, ILLEGAL AND WITHOUT JURISDICTION. THE REGISTRATION SO CANCE LLED U/S 12AA(3) AND 12AA(4) OF THE INCOME TAX ACT, 1961 IS CONTRARY TO THE PROVISIONS OF LAW AND FACTS OF THE CASE AND THE ORD ER SO PASSED BE QUASHED. 6. IN ANOTHER APPEAL I.E. ITANO. 548/IND/2019 ASSES SEE HAS CHALLENGED THE FINDING OF LD. CIT(A)-3 VIDE ITS ORD ER DATED 26.02.2019 PARTLY DISMISSING THE ASSESSEES GROUND ARISING OUT OF THE ORDER OF THE LD. AO FOR A.Y. 2010-11 ORDER DATE D 29.12.2017 RAISING FOLLOWING GROUNDS: 1. THAT ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE INITIATION OF RE-ASSESSMENT PROCEEDINGS AN D ISSUE OF NOTICE U/S 148 DATED 28.03.2017 ARE UNLAWFUL, BAD I N LAW AND WITHOUT JURISDICTION HENCE THE ASSESSMENT MADE BE K INDLY CANCELLED. 2. THAT ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED LOWER AUTHORITIES ERRED AND IN NOT JUSTIFIED IN ASSESSING THE INCOME OF THE ASSESSEE AS THE INCOME FROM BUSINESS AND PROFESSION U/S 28 OF THE I.T. ACT. THE ASSESSEE SUBMITS THAT IT SHRI JAIRAM EDUCATION SOCIETY ITA NO.90 & 548/IND/2019 7 IS RUNNING AN EDUCATIONAL INSTITUTION AND THE INCOM E OF THE INSTITUTION IS THE INCOME U/S 11 OF THE I.T. ACT. T HE FINDING OF THE LD. LOWER AUTHORITIES ASSESSING THE INCOME U/S 28 B E KINDLY QUASHED AND IT BE HELD THAT INCOME OF THE ASSESSEE IS ASSESSABLE AS INCOME U/S 11 OF THE I.T. ACT. 3. THAT ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED LOWER AUTHORITIES ARE WHOLLY WRONG AND OPPOSED TO FACTS THAT THE ASSESSEE HAS CLAIMED BOGUS SALARY EXPENDITURE OF RS.20,48,173 SUCH WRONG AND INJUDICIOUS FINDINGS BE QUASHED AND BE HELD THAT NO BOGUS EXPENDITURE AS ALLEGED WA S CLAIMED BY THE ASSESSEE. THE DISALLOWANCE MADE AT RS.2048173/- THEREFORE, BE KINDLY DELETED. 4. THAT ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED LOWER AUTHORITIES WHOLLY WRONG AND OPPOSED TO FACT THAT THE SOCIETY HAD PAID RS.561877 TO VIJAY R AMANI WHO IS THE MEMBER OF THE SOCIETY AND THEREFORE, THERE IS V IOLATION OF SECTION 13(1)(C) OF THE I.T. ACT AND HENCE THE SOCI ETY IS NOT ELIGIBLE FOR THE DEDUCTION/EXEMPTION U/S 11 AND 12 OF THE I. T. ACT. SUCH INJUDICIOUS AND UNLAWFUL AND WRONG FINDINGS BE QUAS HED AND IT BE HELD THAT THERE IS NO VIOLATION OF SECTION 13(1) (C) OF THE I.T. ACT AND HENCE THE ASSESSEE IS ELIGIBLE FOR DEDUCTION U/ S 11 OF THE ACT. THE DEDUCTION CLAIMED IN THE RETURN, THEREFORE, BE KINDLY ALLOWED. 5. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, WITHOUT PREJUDICE TO GROUND NO.4 ABOVE EVEN IT IT IS HELD THAT THERE WAS A PAYMENT TO VIJAY RAMANI THE TOTAL DENIA L OF EXEMPTION U/S11/12 IS NEITHER JUSTIFIED NOR UNLAWFU L. 6. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, THE ADDITION SUSTAINED AT RS.847694/- DO NOT P RESENT AT ALL THE UNRECORDED FEE AND THEREFORE THE SAID ADDITION SUSTAINED BY THE LD. CIT(A) AT RS. 847694/- BE KINDLY DELETED. 7. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, THE CAPITAL EXPENDITURE INCURRED BY THE ASSESS EE RS.32576619 CLAIMED IN THE RETURN BE KINDLY ALLOWED AS AN APPLICATION OF INCOME U/S 11 AND 12 OF THE I.T. ACT . 8. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, THE LEVY OF INTEREST U/S 234A AND 234B ARE UNL AWFUL CONTRARY TO THE PROVISIONS OF SECTION 234A(3) AND 2 34B(3) AND WITHOUT JURISDICTION AND THEREFORE BE CANCELLED. 7. WE WILL FIRST TAKE UP ITANO.90/IND/2019. THROUG H THIS APPEAL ASSESSEE HAS RAISED VARIOUS GROUNDS INCLUDING THE A DDITIONAL SHRI JAIRAM EDUCATION SOCIETY ITA NO.90 & 548/IND/2019 8 GROUNDS CHALLENGING THE FINDING OF LD. CIT(A) CANCE LLING THE REGISTRATION 12AA(3) & 12AA(4) OF THE ACT, TREATING THE ASSESSEE AS CARRYING OUT BUSINESS AND NOT CARRYING OUT CHARITAB LE ACTIVITIES, HOLDING THAT FUNDS OF THE SOCIETY HAVE BEEN USED FO R THE BENEFIT OF MEMBERS OF THE TRUST AND CANCELLING REGISTRATION 12 AA OF THE ACT WITH RETROSPECTIVE EFFECT FROM 01.04.2008. 8. IN SUPPORT OF VARIOUS GROUNDS INCLUDING ADDITION AL GROUND RAISED BY THE ASSESSEE, LD. COUNSEL FOR THE ASSESSE E HAS VEHEMENTLY ARGUED REFERRING TO THE FOLLOWING WRITTE N SUBMISSIONS: A. APROPOS ADDITIONAL GROUND OF APPEAL IMPUGNED ORDE R AND NOTICE ISSUED U/S 12AA BOTH ARE BAD IN LAW, INVALID , ILLEGAL AND WITHOUT JURISDICTION 1. ASSESSEE FILED ADDITIONAL GROUND OF APPEAL THROUGH A SEPARATE APPLICATION DATED 05.02.2021 WHICH IS A LEGAL GROUN D GOING TO THE ROOT OF THE MATTER. ASSESSEE REQUESTS THAT ADDITION AL GROUND OF APPEAL MAY PLEASE BE ADMITTED IN THE INTEREST OF JU STICE AND APPROPRIATE ADJUDICATION OF THE MATTER. 2. ASSESSEE IS A CHARITABLE SOCIETY REGISTERED U/S 12A OF THE ACT. REGISTRATION U/S 12A IS GRANTED BY CIT (EXEMPTION), BHOPAL. THUS, THE JURISDICTION OF REGISTRATION IS WITH CIT (EXEMP TION), BHOPAL. 3. BASIS OF JURISDICTION UNDER THE ACT HAS BEEN PROVID ED BY CBDT UNDER SECTION 120(3) OF THE ACT, WHICH READS IN ISSUING THE DIRECTIONS OR ORDERS REFERRED TO IN SUB-SECTIONS (1) AND (2), THE BOARD OR OTHER INCOME-TAX AUTHORITY AUTHOR ISED BY IT MAY HAVE REGARD TO ANY ONE OR MORE OF THE FOLLOWING CRI TERIA, NAMELY : (A) TERRITORIAL AREA; (B) PERSONS OR CLASSES OF PERSONS; (C) INCOMES OR CLASSES OF INCOME; AND (D) CASES OR CLASSES OF CASES. 4. SECTION 120(6) PROVIDES THAT CBDT MAY BY NOTIFICATI ON IN THE OFFICIAL GAZETTE DIRECT THAT FOR THE PURPOSE OF FUR NISHING OF RETURN OF SHRI JAIRAM EDUCATION SOCIETY ITA NO.90 & 548/IND/2019 9 INCOME OR DOING OF ANY OTHER ACT OR THING UNDER THI S ACT OR ANY RULE MADE THEREUNDER BY ANY PERSON OR CLASS OF PERSONS, THE INCOME TAX AUTHORITY SHALL EXERCISE AND PERFORM POWERS AND FUN CTIONS IN RELATION TO SAID PERSON OR CLASS OF PERSONS AS MAY BE SPECIF IED IN THE NOTIFICATION. 5. CBDT VIDE NOTIFICATION NO. 52/2014 AND 53/2014 DATE D 22.10.2014 HAS SPECIFICALLY MENTIONED THE POWERS OF THE VARIOUS INCOME TAX AUTHORITIES UNDER THE ACT. IN CBDT NOTIFICATION NO. 52/2014 IT IS SPECIFICALLY MENTIONED THAT CIT(EXEMPTION), BHOPAL SHALL HAVE THE POWER FOR THE JURISDICTION OF THE TERRITORIAL AREA OF THE STATES OF MADHYA PRADES H AND CHHATTISGARH FOR ALL THE PERSONS OF THESE STATES CLAIMING EXEMP TION UNDER CLAUSES (21), (22), (22A), (22B), (23), (23A), (23AAA), (23 B), (23C), (23F), (23FA), (24), (46) AND (47) OF SECTION 10, SECTION 11, SECTION 12, SECTION 13A AND SECTION 13B OF THE INCOME-TAX ACT, 1961 AND ASSESSED OR ASSESSABLE BY AN INCOME-TAX AUTHORITY A T SERIAL NUMBERS 35 TO 45 SPECIFIED IN THE NOTIFICATION OF GOVERNMEN T OF INDIA BEARING NUMBER S.O. _ DATED THE TH OCTOBER, 2014. [CLPB 16 3-164] 1. THIS NOTIFICATION CAME INTO EFFECT FROM 15 TH NOVEMBER 2014. 6. FROM THE ABOVE IT IS CLEAR THAT, W.E.F. 15 TH NOVEMBER 2014, CIT (EXEMPTION) HAS BEEN CONSTITUTED SEPARATELY FOR ALL THE PERSONS WHO ARE CLAIMING EXEMPTION U/S 12. 7. THE ABOVE REFERRED CBDT NOTIFICATION DOES NOT SPECI FY IF THE CIT (EXEMPTION) CAN TRANSFER ITS POWER OR JURISDICTION TO OTHER CIT OR PR. CIT. THE SAID NOTIFICATION HAS AUTHORISED THE CIT ( EXEMPTION) TO ISSUE ORDER IN WRITING FOR THE EXERCISE OF THE POWERS AND FUNCTIONS BY THE ADDITIONAL CIT OR JCT OR TRO WHO ARE THE SUBORDINAT E TO THEM AND HAS AUTHORISED THE ADDITIONAL CIT TO ISSUE ORDER IN WRITING FOR THE EXERCISE OF THE POWERS BY THE ASSESSING OFFICER WHO ARE THE SUBORDINATE TO THEM. IN SECTION 124 OF THE ACT, JUR ISDICTION OF ASSESSING OFFICER HAS BEEN GIVEN AND NOT THE JURISD ICTION OF COMMISSIONER. 8. IN THE INSTANT CASE, SEARCH OPERATION U/S 132 WAS C ONDUCTED IN THE HARIRAMANI GROUP, BHOPAL ON 30.08.2016. DURING THE COURSE OF SEARCH, CERTAIN LOOSE PAPERS RELATING TO THE ASSESS EE WERE FOUND AND SEIZED FROM THE RESIDENTIAL PREMISES OF SHRI PRAKAS H HARIRAMANI. NO SEARCH AND SEIZURE OPERATIONS WERE CONDUCTED IN THE CASE OF ASSESSEE. NEITHER ANY PROCEEDINGS U/S 153C WERE CON DUCTED. SHRI JAIRAM EDUCATION SOCIETY ITA NO.90 & 548/IND/2019 10 9. SUBSEQUENTLY, BASED ON SEIZED DOCUMENTS IN CASE OF SHRI PRAKASH HARIRAMANI, PROCEEDINGS U/S 143(3) RWS 147 WERE COM PLETED FOR AY 2010-11 ON 29.12.2017 BY LD. ACIT(CENTRAL)-II, BHOP AL. [PB 42-58] 10. IT WAS ONLY AFTER THE COMPLETION OF PROCEEDINGS U/S 143(3) RWS 147 THAT A PROPOSAL WAS SENT BY THE LD. AO VIDE LET TER DATED 07.02.2018 THROUGH JCIT (CENTRAL), BHOPAL VIDE LETT ER DATED 15.02.2018 REQUESTING LD. PR. CIT (CENTRAL), BHOPAL FOR CANCELLATION OF REGISTRATION U/S 12A OF THE ASSESSEE. NOTICE U/S 12 AA WAS ISSUED BY LD. PR. CIT (CENTRAL), BHOPAL ON 02.04.2018. IN RES PONSE TO THIS NOTICE, REPLY WAS SUBMITTED BY ASSESSEE. LD. PR. CI T (CENTRAL), BHOPAL PASSED THE IMPUGNED ORDER U/S 12AA(3) AND 12 AA(4) ON 29.11.2018. [PB 01, 02-06] 11. PROCEEDINGS U/S 127 ARE LIMITED ONLY FOR THE PURPOS E OF CO- ORDINATED ASSESSMENTS. SECTION 127 OF THE ACT PROVI DES FOR TRANSFER OF POWER FROM ONE ASSESSING OFFICER TO ANOTHER ASSE SSING OFFICER. THIS SECTION DOES NOT PROVIDE FOR TRANSFER OF POWER FROM ONE CIT TO ANOTHER CIT. SECTION 127 OF THE ACT READS AS (1) (2) WHERE THE ASSESSING OFFICER OR ASSESSING OFFICE RS FROM WHOM THE CASE IS TO BE TRANSFERRED AND THE ASSESSING OFFICER OR ASSESSING OFFICERS TO WHOM THE CASE IS TO BE TRANSFERRED ARE NOT SUBORDINATE TO THE SAME PRINCIPAL DIRECTOR GENERAL OR DIRECTOR GEN ERAL OR PRINCIPAL CHIEF COMMISSIONER OR CHIEF COMMISSIONER OR PRINCIP AL COMMISSIONER OR COMMISSIONER, (A). (B). (3) 12. FROM THE COMBINED READING OF SECTION 127 AND 120 AL ONG WITH CBDT CIRCULARS / NOTIFICATIONS, IT IS EVIDENT THAT CIT (EXEMPTION) CANNOT TRANSFER HIS POWERS AND DUTIES TO ANOTHER CI T OF THE SAME RANK TO CANCEL THE REGISTRATION GRANTED U/S 12AA. 13. NOTHING IS AVAILABLE ON RECORD TO ESTABLISH IF ANY ORDER/APPROVAL HAS BEEN TAKEN FROM HIGHER AUTHORITIES IN WRITING F OR TRANSFERRING THE CASE TO LD. PR. CIT(CENTRAL) AND IF ANY OPPORTUNITY OF BEING HEARD WAS GIVEN. IN THE ABSENCE OF THIS, THE IMPUGNED ORDER P ASSED BY LD. PR. CIT(CENTRAL), BHOPAL IS INVALID, BAD IN LAW AND WIT HOUT JURISDICTION. 14. INSTANT EXERCISE RELATING TO REVOCATION OF REGISTRA TION OF THE ASSESSEE IS WITHOUT JURISDICTION. SECTION 12AA READ WITH RULE 17A AND CBDT CIRCULAR NO. 584 DATED 13.11.1990 REQUIRES THAT WHILE SEEKING REGISTRATION U/S 12A / 12AA, THE APPLICATIO N IS OUGHT TO BE MADE TO JURISDICTIONAL COMMISSIONER / DIRECTOR OF I NCOME TAX (EXEMPTION). POWERS ENTRUSTED U/S 12A/12AA ARE TO B E EXERCISED BY THE JURISDICTIONAL COMMISSIONER / DIRECTOR OF INCOM E TAX (EXEMPTION) WHICH INCLUDE BOTH, GRANTING OF THE REGISTRATION AN D THE CANCELLATION THEREOF. THE ONE WHO CANNOT GRANT THE REGISTRATION ALSO CANNOT REVOKE THE SAME FOR WANT OF PROPER JURISDICTION. SECTION 1 27 RELATING TO SHRI JAIRAM EDUCATION SOCIETY ITA NO.90 & 548/IND/2019 11 TRANSFER OF CASES RELATES TO TRANSFER OF A CASE FRO M ONE ASSESSING OFFICER TO ANOTHER ASSESSING OFFICER. MATTERS RELAT ING TO GRANTING AND CANCELLATION OF REGISTRATION U/S 12A/12AA ARE NOT T HE SUBJECT MATTERS TO BE DEALT BY THE ASSESSING OFFICER BUT BY JURISDI CTIONAL COMMISSIONER / DIRECTOR OF INCOME TAX (EXEMPTION). 15. THE POWER OF CANCELLATION OR WITHDRAWAL OF REGISTRA TION ALLOWED TO A TRUST OR INSTITUTION CAN BE INVOKED BY THE GRANTO R OF REGISTRATION, VIZ., CIT(EXEMPTION) ONLY, ON THE LIMITED GROUNDS M ENTIONED IN SECTION 12AA(3) OF THE ACT AND NOT ON ANY OTHER GROUNDS. ACCORDING TO SECTION 12AA(3), IF THE CIT(EXEMPTION) IS SATISFIED THAT THE ACTIVITIES OF ANY TRUST OR INSTITUTION ARE NOT GENUINE OR ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST OR INSTITUTION, MAY CANCEL THE REGISTRATION. PROVISION S OF SECTION 12AA(3) DO NOT EMPOWER LD. PR. CIT(CENTRAL), BHOPAL TO CANC EL THE REGISTRATION. 16. ABOVE CONTENTIONS OF THE ASSESSEE ARE SQUARELY COVE RED BY THE DECISION OF HONBLE JAIPUR BENCH OF ITAT IN THE CAS E OF WHOLESALE CLOTH MERCHANT ASSOCIATION ITA NO. 688/JP/2019 ORDER PRONOUNCED ON 06.01.2021 [CLPB 65-122] 2. PARA 13 WE ALSO OBSERVE THAT, THEREAFTER THE LD. DCIT(CC) KOTA, AS SENT A PROPOSAL TO THE PR. CIT(C), JAIPUR TO CAN CEL THE 12A REGISTRATION OF THE ASSESSEE VIDE LETTER DATED 31.1 2.2018. ON THE BASIS OF PROPOSAL FROM DCIT(CC) KOTA, THE LD. PR. C IT HAS ISSUED THE SHOW CAUSE NOTICE TO THE ASSESSEE U/S 12AA(3)/(4) D ATED 22.02.2019 3. IN THE INSTANT CASE, LD. ACIT (CENTRAL)-2, BHOPAL V IDE LETTER DATED 07.02.2018 AND ON THE RECOMMENDATION OF JCIT (CENTR AL), BHOPAL REQUESTED LD. PR. CIT (CENTRAL), BHOPAL TO CANCEL R EGISTRATION U/S 12A OF THE ASSESSEE SOCIETY. IT WAS IN VIEW OF THIS PRO POSAL THAT LD. PR. CIT (CENTRAL), BHOPAL ISSUED A SHOW CAUSE NOTICE U/ S 12AA DATED 02.04.2018. [PCIT PAGE 4 PARA 5 AND 6, PB 01] 4. PARA 14 WE FOUND THAT THE ABOVE FACTS AND PROCEE DINGS OF POWER OF TRANSFER U/S 127 WAS ONLY FOR A LIMITED PU RPOSE OF CO- ORDINATE ASSESSMENT. NEITHER ANY SEARCH & SEIZURE A CTION NOR ANY NOTICE U/S 153A OR 153C OF THE ACT OR ASSESSMENT U/ S 153A OR 153C OF THE ACT IN THE CASE OF ASSESSEE WERE INITIATED A ND THERE WAS ONLY A SURVEY U/S 133A OF THE ACT IN THE CASE OF ASSESSEE. THE ASSESSMENT HAS BEEN COMPLETED U/S 148/143(3) OF THE ACT VIDE O RDER DATED 19.12.2018. 5. IN THE INSTANT CASE, NO NOTICE U/S 153A OR 153C WER E ISSUED. ASSESSMENT PROCEEDINGS U/S 147 RWS 143(3) WERE COMP LETED FOR AY 2010-11 ON 29.12.2017. THESE PROCEEDINGS FOR AY 201 0-11 WERE CENTRALIZED U/S 127 ONLY FOR THE LIMITED PURPOSE OF CO-ORDINATE ASSESSMENT. [PB 42 58] SHRI JAIRAM EDUCATION SOCIETY ITA NO.90 & 548/IND/2019 12 6. PARA 19 WE FURTHER OBSERVE THAT SEC. 127 OF THE ACT EMPOWER TO TRANSFER CASES AMONG ASSESSING OFFICERS BUT NOT TO COMMISSIONERS OF INCOME TAX AS CIT IS NOT AN ASSESSING OFFICER. IN O UR VIEW, TO PASS AN ORDER U/S 12A FOR REGISTRATION OR CANCELLATION I S NOT WITHIN THE JURISDICTION OR POWER OF AN ASSESSING OFFICER. HENC E REGISTRATION U/S. 12A CAN BE WITHDRAWN ONLY BY THE PRESCRIBED AUTHOR ITY WHO HAS BEEN EMPOWERED TO GRANT THE SAME AND BY THE NOTIFIC ATION DATED 22.10.2014 THE LD.CIT(EXMP.) HAS EMPOWERED FOR THE SAME, HENCE THE PR.CIT (CENTRAL) CANNOT CANCELLED THE SAME. 7. PARA 21 ..THUS, KEEPING IN VIEW OUR ABOVE DI SCUSSIONS, WE ARE OF THE VIEW THAT THE LD. PCIT HAD NO JURISDI CTION TO PASS ORDER U/S 12AA(3) & 12AA(4) OF THE ACT AND THE SAME IS NO T SUSTAINABLE IN THE EYES OF LAW AND ACCORDINGLY STANDS QUASHED. [E MPHASIS SUPPLIED] 8. IN THE INSTANT CASE, BOTH, THE SHOW CAUSE NOTICE IS SUED U/S 12AA AND THE IMPUGNED ORDER HAVE BEEN PASSED BY LD. PR. CIT(CENTRAL), BHOPAL. CONSIDERING THE FACTS AS MENTIONED ABOVE, T HE IMPUGNED ORDER PASSED BY LD. PR. CIT(CENTRAL), BHOPAL IS ILL EGAL, BAD IN LAW AND WITHOUT JURISDICTION, LIABLE TO BE QUASHED AS V OID AB INITIO. WITHOUT PREJUDICE TO ADDITIONAL GROUND TAKEN ABOVE: B. APROPOS GROUND NO. 1, 2 AND 6 CANCELLATION OF THE REGISTRATION U/S 12AA RETROSPECTIVELY BY INVOKING PROVISIONS OF SECTION 12AA(3) AND 12AA(4), SINCE ACTIVITIES OF THE ASSESSEE ARE G ENUINE AND ARE BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST AND THUS PROVISIONS OF SECTION 12AA(3) ARE NOT APPLICABLE 1. ASSESSEE IS DULY REGISTERED UNDER THE M.P. SOCIETY REGISTRATION ACT, 1973 FOR IMPARTING EDUCATION. APPROVAL U/S 12A A HAS ALSO BEEN GRANTED TO THE ASSESSEE. [PB 15] REGISTRATION OF A TRUST AND CANCELLATION OF THE SAM E ARE ADMINISTRATIVE FUNCTIONS WHEREAS ASSESSMENT OF THE TRUST IS A QUASI JUDICIAL FUNCTION. ADMINISTRATIVE FUNCTION AND QUAS I JUDICIAL FUNCTIONS CANNOT BE MIXED UP TOGETHER. 2. IN THE INSTANT CASE, CANCELLATION OF REGISTRATION G RANTED U/S 12AA IS BASED ON CERTAIN SEIZED DOCUMENTS IN THE FORM OF LOOSE SHEETS. THE EVIDENCES RELIED UPON FOR CANCELLATION OF REGISTRAT ION OF THE ASSESSEE U/S 12AA OF THE ACT DO NOT IN ANY WAY DEMONSTRATE A ND ESTABLISH THAT THE RECEIPT ARE SUPPRESSED AND EXPENSES ARE IN FLATED. THERE IS NO COGENT AND POSITIVE MATERIAL WHICH CORROBORATIVE LY DEMONSTRATES THAT MONEY HAS BEEN ALLEGEDLY SIPHONED OFF FOR PERS ONAL BENEFITS OF THE TRUSTEES OF THE ASSESSEE. 3. PROPER BOOKS OF ACCOUNT ARE MAINTAINED BY THE ASSES SEE IN THE ORDINARY COURSE OF ITS EDUCATIONAL ACTIVITIES. THE BOOKS OF ACCOUNTS ARE DULY AUDITED AND NO ADVERSE REMARKS HAVE BEEN M ADE. THERE CAN BE INSTANCES OF FINANCIAL IRREGULARITIES, BUT T HESE HAVE TO BE CORROBORATED BY DOCUMENTARY EVIDENCES INDEPENDENTLY . SHRI JAIRAM EDUCATION SOCIETY ITA NO.90 & 548/IND/2019 13 IT WAS HELD IN THE CASE OF DIT(EXEMPTION) V. VENKAT ESHA EDUCATION SOCIETY (2012) 48 (I) ITCL 27 (KAR) THAT SHORT COMI NGS IN THE FUNCTIONING OF A SOCIETY CANNOT BE CONSIDERED AS LA CK OF GENUINENESS OF THE ACTIVITIES OF THE SOCIETY. [PB 76-94] 4. LD. ACIT(CENTRAL)-2, BHOPAL VIDE HIS LETTER DATED 0 7.02.2018 AND ON THE RECOMMENDATION OF JCIT(CENTRAL), BHOPAL DATE D 15.02.2018 REQUESTED THAT THE REGISTRATION U/S 12A GRANTED TO THE ASSESSEE BE CANCELLED AS THE ACTIVITIES ARE NOT BEING CARRIED O UT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST AND THE ACTIVITIES AR E NOT GENUINELY RECORDED IN THE BOOKS OF ACCOUNTS. [PCIT PAGE 4 PAR A 5] 9. LD. PR. CIT(CENTRAL), BHOPAL IN VIEW OF THE PROPOS AL AS RECEIVED FROM ACIT(CENTRAL)-2, BHOPAL DULY RECOMMENDED BY JC IT(CENTRAL), BHOPAL ISSUED SHOW CAUSE NOTICE U/S 12AA DATED 02. 04.2018. [PR. CIT ORDER PAGE 4 PARA 6] 5. SECTION 12AA(3) REQUIRES PR.CIT OR CIT TO RECORD HI S SATISFACTION IF THE ACTIVITIES OF THE TRUST OR INSTITUTION ARE NOT GENUINE OR ARE NOT CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE T RUST OR INSTITUTION. IN THE INSTANT CASE, LD. PR. CIT(CENTRAL), BHOPAL A CTED ON A BORROWED SATISFACTION FOR ISSUING SHOW CAUSE NOTICE U/S 12AA . NO INDEPENDENT ENQUIRY WAS MADE TO ARRIVE AT HIS OWN SATISFACTION. 6. GRANTING OF REGISTRATION PROCEDURE IS DIFFERENT FRO M ASSESSMENT PROCEDURES. THE POWER VESTED WITH THE CIT AT THE TI ME OF GRANTING THE REGISTRATION IS TWOFOLD: 1) WHETHER THE TRUST OR INSTITUTION HAS CHARITABLE OR RELIGIOUS OBJECTS; AND 2) WHETHER THE ACTIVITIES CARRIED OUT ARE GENUINE IN N ATURE. TO SATISFY THESE TWIN CONDITIONS, CIT(EXEMPTION) MA Y CALL FOR SUCH INFORMATION AS MAY BE REQUIRED. AT THE TIME OF GRAN T OF REGISTRATION TO A TRUST OR INSTITUTION, THE POWER OF THE CIT(EXEMPT ION) IS LIMITED TO EXAMINATION WHETHER TRUST'S OBJECTS ARE CHARITABLE OR NOT AND TRUSTS ACTIVITIES ARE GENUINE OR NOT. WHEN CIT(EXEMPTION) GRANTS REGISTRATION TO TRUST OR INSTITUTION IT MEANS THAT HE IS SATISFIED ABOUT OBJECTS AND GENUIN ENESS OF ACTIVITIES OF TRUST OR INSTITUTION. LD. CIT(EXEMPTION) HAVING SATISFIED FOR THE ABOVE T WOFOLD CONDITIONS, GRANTED THE REGISTRATION FACT OF WHICH IS UNDISPUTE D. IT IS NOT A CASE WHERE THE REGISTRATION WAS OBTAINED BY THE ASSESSEE UNDER FRAUD OR MIS-REPRESENTATION. 7. IN NO OTHER SITUATION, THE REGISTRATION GRANTED CAN BE CANCELLED / WITHDRAWN BY THE CIT(EXEMPTION). SHRI JAIRAM EDUCATION SOCIETY ITA NO.90 & 548/IND/2019 14 THUS, THE FINDING OF CIT(EXEMPTION) CANCELLING REGI STRATION HAS NOT ONLY TO BE CONCEPTUAL OR CONTEXTUAL BUT SHOULD BE W ITHIN THE FOUR CORNERS OF LAW SO THAT THEY ARE NOT SURPASSING THE POWER GRANTED U/S 12AA(3). 8. FOLLOWING ARE THE CIRCUMSTANCES IN WHICH AN INSTITU TION CAN AVOID BREACH OF TRUST UNDER THE ACT- I. CARRYING ON OBJECTS DISCRETELY FOR CHARITABLE OR RE LIGIOUS PURPOSES II. COMPLYING WITH THE TERMS AS ENUMERATED IN THE DEED OF TRUST III. MAINTAINING PROPER BOOKS OF ACCOUNTS IV. INVESTING OF INCOME IN A MANNER THAT IS IN ACCORDAN CE WITH THE LAW V. NO DIVERSION OF INCOME OR THE ASSETS OF THE TRUST VI. APPLYING INCOME ONLY FOR CHARITABLE OR RELIGIOUS PU RPOSES IN TERMS OF THE DEED OF TRUST. VII. COMPLYING WITH ALL OTHER PROVISIONS AS REQUIRED UND ER THE INCOME TAX OR ANY OTHER LAW. 10. THE ASSESSEE HAS COMPLIED WITH ALL THE ABOVE LISTED REQUIREMENTS AND HAS NOT BREACHED THE TRUST ENTRUST ED BY THE ACT WHILE GRANTING REGISTRATION U/S 12A OF THE ACT. 11. THE APPREHENSIONS EXPRESSED ON THE BASIS OF SURMISE S AND CONJECTURES ARE INCORRECT, UNJUSTIFIED AND AGAINST THE FACTS OF THE INSTANT CASE. THUS, THE FACTUAL AND LEGAL POSITION AS EMERGES FRO M THE FOREGOING SUBMISSIONS IS THAT ONCE THE REGISTRATION IS GRANTE D TO A TRUST OR INSTITUTION IT CAN BE CANCELLED ONLY ON BREACH OF E ITHER OF THE TWO CONDITIONS MENTIONED IN SECTION 12AA(3). THERE IS N O BREACH OF THE ABOVE STATED CONDITION. ACCORDINGLY, THE REGISTRATI ON TO THE ASSESSEE OUGHT TO BE CONTINUED U/S 12A OF THE ACT. 9. THE ONUS OF THE FACTORS FOR CANCELLING THE REGISTRA TION GRANTED TO A TRUST OR INSTITUTION IS ON THE DEPARTMENT AND NOT O N THE INSTITUTION AS HELD IN PARA 30 IN CASE OF GURU GOBIND SINGH EDUCAT IONAL SOCIETY V. CIT (2009) 118 ITD 207 (AMRITSAR). 12. IT WAS FURTHER HELD IN THIS CASE IN PARA 29 THAT FOR ANY IRREGULARITY OR ILLEGALITY COMMITTED BY ITS MEMBERS , A SOCIETY, WHICH IS A JURIDICAL ENTITY HAVING INDEPENDENT EXISTENCE, CA NNOT BE HELD LIABLE. FURTHER, WHEN THERE IS NO FINDING RECORDED THAT THE INCOME OF THE SOCIETY HAS FLOWED TO ITS MEMBERS, IRREGULARITIES C OMMITTED BY MEMBERS IN THEIR INDIVIDUAL CAPACITY CANNOT BE HELD AGAINST THE SOCIETY FOR THE PURPOSE OF CANCELLATION OF REGISTRA TION. IN THE INSTANT CASE, THE SEIZED MATERIAL RELIED UPO N DOES NOT ESTABLISH THAT ACTIVITIES OF THE ASSESSEE ARE NOT GENUINE AND ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS. IT IS M ERELY ON THE BASIS OF CERTAIN LOOSE PAPERS FOUND AND SEIZED DURING THE SE ARCH OPERATIONS SHRI JAIRAM EDUCATION SOCIETY ITA NO.90 & 548/IND/2019 15 CARRIED OUT IN THE CASE OF PRAKASH HARIRAMANI AT HI S RESIDENCE THAT LD. PR.CIT (CENTRAL) PROCEEDED TO CANCEL THE REGIST RATION GRANTED EARLIER. 10. STRONG RELIANCE IS PLACED ON THE FOLLOWING JUDICIAL PRECEDENTS WHICH SQUARELY COVERS AND FORTIFIES THE CASE OF THE ASSESSEE A) HONBLE JURISDICTIONAL BENCH OF INDORE ITAT IN THE CASE OF CHIRAYU CHARITABLE FOUNDATION ITA NO. 179/IND/201 9 DTD. 09.02.2021. 13. FACTS OF THIS DECISION ARE SIMILAR TO THAT IN THE I NSTANT CASE OF THE ASSESSEE AND ARE SUMMARIZED IN THE TABLE BEL OW SR. NO. PARTICULARS CHIRAYU CHARITABLE FOUNDATION [ITA 179/IND/2019 DTD 09.02.2021] SHREE JAIRAM EDUCATION SOCIETY [INSTANT CASE ITA 90/IND/2019] 1. ORDER U/S 12AA 12AA(3) AND 12AA(4) 2. FACTS AND SUBMISSIONS A. PG 2 PARA 2 CHARITABLE SOCIETY REGISTERED UNDER THE M.P. SOCIETIES REGISTRATION ACT, 1973. MAIN OBJECT IS TO CARRY OUT EDUCATIONAL ACTIVITIES IN MEDICAL AND EDUCATION FIELD. MEDICAL COLLEGES AND HOSPITAL RUN ARE APPROVED BY VARIOUS GOVERNMENT BODIES NAMELY MCI, INC AND SNC, DIRECTOR MEDICAL EDUCATION, MP, MSU, JABALPUR AND BARKARTULLAH UNIVERSITY, BHOPAL B. PG 2 PARA 3 REGISTRATION GRANTED U/S 12AA ON 29.11.2002 W.E.F. 01.04.2002. SEARCH & SEIZURE OPERATIONS CHIRAYU GROUP ON 04.11.2016. CASH AND JEWELLERY WERE FOUND AT THE RESIDENCE OF THE FAMILY MEMBERS OF DIRECTOR AND PROMOTER OF VARIOUS ENTITIES OF CHIRAYU GROUP. A. CHARITABLE SOCIETY REGISTERED UNDER THE M.P. SOCIETIES REGISTRATION ACT, 1973. MAIN OBJECT IMPARTING EDUCATION. COLLEGE TRINITY COLLEGE ESTABLISHED. APPROVED BY VARIOUS GOVERNMENT BODIES NAMELY AICTE, NCTE AND DTE. AFFILIATED TO RAJEEV GANDHI PRODHOYGIK VISHWAVIDYALAY AND BARKARTULLAH UNIVERSITY, BHOPAL. B. REGISTRATION GRANTED U/S 12AA W.E.F. 01.04.2008. SEARCH & SEIZURE OPERATIONS AT THE RESIDENCE OF SHRI PRAKASH HARIRAMANI ON 30.08.2016. CERTAIN DOCUMENTS IN THE FORM, OF LOOSE SHEETS WERE SEIZED. C. PROPOSAL FOR CANCELLATION BY LD. ACIT (CENTRAL), BHOPAL DULY RECOMMENDED BY JCIT (CENTRAL), BHOPAL. D. IN VIEW OF THIS PROPOSAL RECEIVED FROM LD. ACIT SHRI JAIRAM EDUCATION SOCIETY ITA NO.90 & 548/IND/2019 16 C. PG 3 PARA 4 PROPOSAL FOR CANCELLATION BY LD. AO DULY RECOMMENDED BY ADDL. CIT (CENTRAL), BHOPAL. D. PG 6 PARA 5 ON THE BASIS OF THE PROPOSAL BY LD. AO SHOW CAUSE NOTICE U/S 12AA WAS ISSUED BY LD. PR.CIT(CENTRAL), BHOPAL E. PG 9 1 ST PARA REGULAR ASSESSMENT CONDUCTED & COMPLETED MUCH PRIOR TO SEARCH. ALL THE DOCUMENTS WITH REGARDS TO RECEIPT OF DONATION WERE FURNISHED. LD. AO ACCEPTED THE DOCUMENTS WITHOUT MAKING ANY ADDITION. F. PG 10 1 ST PARA LD. PR. CIT CANCELLED THE REGISTRATION BY INVOKING PROVISIONS OF SECTION 12AA(3) RETROSPECTIVELY W.E.F. 01.04.2011 VIDE ORDER DATED 26.12.2018. G. PG 12 PARA 9 ISSUES REFERRED IN THE SHOW CAUSE NOTICE U/S 12AA ARE RELATED TO REGULAR ASSESSMENT PROCEEDINGS AND HAVE NO BEARING ON CONTINUATION OF REGISTRATION GRANTED U/S 12AA H. PG 17 LAST 3 RD LINE SECTION 13 APPLICABLE FOR ASSESSMENT AND NOT FOR REGISTRATION I. PG 53 PARA 30 PRESUMPTION U/S 292C IS APPLICABLE ONLY ON THE SEARCHED PERSON (CENTRAL), BHOPAL, SHOW CAUSE NOTICE U/S 12AA WAS ISSUED BY LD.PR.CIT(CENTRAL), BHOPAL E. REGULAR ASSESSMENT COMPLETED FOR AY 2010-11 U/S 143(3) RWS 147. ADDITIONS MADE ON THE BASIS OF ROUGH NOTINGS AND JOTTINGS ON THE LOOSE SHEETS, FOR WHICH ASSESSEE IS IN APPEAL BEFORE YOUR HONORS. F. LD. PR. CIT (CENTRAL), BHOPAL CANCELLED THE REGISTRATION BY INVOKING PROVISIONS OF SECTION 12AA(3) AND 12AA(4) RETROSPECTIVELY W.E.F. 01.04.2008 VIDE ORDER DATED 29.11.2018. G. ISSUES REFERRED IN THE SHOW CAUSE NOTICE U/S 12AA ARE RELATED TO REGULAR ASSESSMENT PROCEEDINGS AND HAVE NO BEARING ON CONTINUATION OF REGISTRATION GRANTED U/S 12AA H. SECTION 13 APPLICABLE FOR ASSESSMENT AND NOT FOR CANCELLATION OF REGISTRATION. I. PRESUMPTION U/S 292C IS APPLICABLE ONLY ON THE SEARCHED PERSON. DOCUMENTS WERE SEIZED IN THE FORM OF LOOSE SHEETS FROM THE RESIDENCE OF SHRI PRAKASH HARIRAMANI DURING HIS SEARCH. SHRI JAIRAM EDUCATION SOCIETY ITA NO.90 & 548/IND/2019 17 3. FINDINGS & CONTENTIONS OF ASSESSEE A. PG 35 PARA 12 HONBLE BENCH NOTED THAT THE SOLE ISSUE IN APPEAL IS WHETHER LD. PR.CIT IS JUSTIFIED IN INVOKING PROVISIONS OF SECTION 12AA(3) TO CANCEL REGISTRATION GRANTED U/S 12AA B. PG 37 PARA 14 AIMS AND OBJECTS OF THE ASSESSEE SOCIETY ARE WITHIN THE MEANING OF SECTION 2(15) C. PG 37 PARA 15 TO ACHIEVE THE AIMS AND OBJECTS, ASSESSEE SOCIETY HAS ESTABLISHED AND IS CONSISTENTLY RUNNING COLLEGES AND HOSPITALS D. PG 50 PARA 28 LD. PR. CIT HAS NOT MADE INDEPENDENT ENQUIRY OR INVESTIGATION OR COLLECTED EVIDENCE 14. IN OUR VIEW THE ALLEGED IRREGULARITY IN THE ADMISSION IN ONE OF THE COLLEGES NOTED BY CBI SHOULD NOT HAVE BEEN TAKEN AS A BASIS FOR CANCELLING REGISTRATION U/S 12AA E. PG 50 PARA 29 ALLEGATION ON THE GENUINENESS OF DONORS AND CREDITWORTHINESS IN DOUBT, WE OBSERVE THAT THIS ISSUE HAS NO STRENGTH TO FORM A BASIS FOR CANCELLATION OF REGISTRATION U/S 12AA(3). THIS ISSUE TO BE DEALT IN REGULAR ASSESSMENT PROCEEDINGS. F. PG 61 PARA 36 CONSISTENTLY HELD BY HONBLE COURTS AND CO- ORDINATE BENCHES THAT REGISTRATION GRANTED U/S A. LD. PR. CIT (CENTRAL), BHOPAL CANCELLED THE REGISTRATION GRANTED U/S 12AA BY INVOKING PROVISIONS OF SECTION 12AA(3) AND 12AA(4) B. AIMS AND OBJECTS OF THE ASSESSEE SOCIETY ARE WITHIN THE MEANING OF SECTION 2(15) C. TO ACHIEVE THE AIMS AND OBJECTS, ASSESSEE SOCIETY HAS ESTABLISHED AND IS CONSISTENTLY RUNNING THE COLLEGE IN THE NAME OF TRINITY INSTITUTE OF TECHNOLOGY AND RESEARCH. ALLEGATION MADE ONLY FOR AY 2010-11 AND NOT IN ANY OTHER YEARS. D. NO INDEPENDENT ENQUIRY OR INVESTIGATION OR EVIDENCE COLLECTED BY LD. PR. CIT (CENTRAL), BHOPAL. SATISFACTION BORROWED FROM LD. ACIT (CENTRAL), BHOPAL. REGISTRATION U/S 12AA CANCELLED BY ON THE BASIS OF ALLEGATION BY THE LD. AO IN ASSESSMENT FOR AY 2010-11 THAT THE FUNDS ARE BEING USED FOR THE BENEFIT OF THE MEMBERS OF THE TRUST. E. ALLEGATION THAT THE FUNDS ARE BEING USED FOR THE BENEFIT OF THE MEMBERS OF THE TRUST CANNOT FORM BASIS FOR CANCELLATION OF REGISTRATION U/S 12AA(3). THIS ISSUE TO BE DEALT IN REGULAR ASSESSMENT PROCEEDINGS. F. REGISTRATION GRANTED U/S 12AA CANNOT BE CANCELLED BY INVOKING PROVISIONS OF SECTION 12AA(3) UNLESS IT IS ESTABLISHED BY MATERIAL EVIDENCE THAT THE ACTIVITIES SHRI JAIRAM EDUCATION SOCIETY ITA NO.90 & 548/IND/2019 18 12AA CANNOT BE CANCELLED BY INVOKING PROVISIONS OF SECTION 12AA(3) UNLESS IT IS ESTABLISHED BY MATERIAL EVIDENCE THAT THE ACTIVITIES OF SUCH TRUSTS OR INSTITUTIONS ARE NOT GENUINE OR ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUSTS OR REASONABLE OPPORTUNITY OF BEING HEARD NOT GRANTED BEFORE CANCELLING REGISTRATION. G. PG 73 POINT (IV) ISSUES RAISED IN SHOW CAUSE NOTICE NOT RELEVANT FOR CANCELLATION OF REGISTRATION U/S 12AA(3). THESE ISSUES TO BE EXAMINED IN REGULAR ASSESSMENT PROCEEDINGS. REGISTRATION GRANTED U/S 12AA CAN BE CANCELLED ONLY IF IT IS FOUND THAT THE ACTIVITIES OF THE SOCIETY/TRUST ARE EITHER NOT GENUINE OR ARE NOT BEING CARRIED OUT IN ACCORDANCE TO OBJECTS. H. PG 74 POINT (V) NO INDEPENDENT ENQUIRY CONDUCTED BY LD. PCIT I. PG 75 PARA 39 ORDER OF LD. PR. CIT CANCELLING REGISTRATION GRANTED U/S 12AA(1) DESERVES TO BE QUASHED. HONBLE BENCH DIRECTED THE REVENUE TO RESTORE THE REGISTRATION U/S 12AA(1) OF THE ASSESSEE SOCIETY W.E.F. 01.04.2011. OF SUCH TRUSTS OR INSTITUTIONS ARE NOT GENUINE OR ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUSTS OR REASONABLE OPPORTUNITY OF BEING HEARD NOT GRANTED BEFORE CANCELLING REGISTRATION. G. ISSUES RAISED IN SHOW CAUSE NOTICE NOT RELEVANT FOR CANCELLATION OF REGISTRATION U/S 12AA(3) AND 12AA(4). THESE ISSUES TO BE EXAMINED IN REGULAR ASSESSMENT PROCEEDINGS. REGISTRATION GRANTED U/S 12AA CAN BE CANCELLED ONLY IF IT IS FOUND THAT THE ACTIVITIES OF THE SOCIETY/TRUST ARE EITHER NOT GENUINE OR ARE NOT BEING CARRIED OUT IN ACCORDANCE TO OBJECTS. H. NO INDEPENDENT ENQUIRY CONDUCTED BY LD. PR.CIT (CENTRAL), BHOPAL. PROCEEDINGS U/S 12AA INITIATED ON THE BASIS OF BORROWED SATISFACTION. I. IT IS HUMBLY SUBMITTED THAT THE REGISTRATION GRANTED U/S 12AA(1) DESERVES TO BE QUASHED AND THE REGISTRATION GRANTED U/S 12AA BE RESTORED W.E.F. 01.04.2008. B) DIVINE SHIKSHA SAMITI [2020] 121 TAXMANN.COM 175 HONBLE JURISDICTIONAL HIGH COURT OF MADHYA PRADESH ORDER PRONOUNCED ON 06.01.2020 HEAD NOTE ..WHETHER THEREFORE, WHERE THERE WAS NO DOUBT ABOUT GENUINENE SS OF OBJECTS OF SOCIETY FOR GRANT OF REGISTRATION UNDER SECTION 12AA, TRIBUNAL SHRI JAIRAM EDUCATION SOCIETY ITA NO.90 & 548/IND/2019 19 WAS CORRECT IN DIRECTING COMMISSIONER (EXEMPTION) T O GRANT REGISTRATION TO SOCIETY UNDER SECTION 12AA, IRRESPE CTIVE OF FINDINGS OF COMMISSIONER (EXEMPTION) THAT THERE WAS DIVERSIO N OF INCOME OF ASSESSEE SOCIETY FOR PROVIDING UNDUE BENEFIT TO ITS OFFICE BEARERS AND THUS SOCIETY EXISTED FOR PURPOSE OF PROFIT OF O FFICE BEARERS AND NOT FOR CHARITABLE PURPOSE - HELD, YES [PARA 7 AND 8] [IN FAVOUR OF ASSESSEE] [CLPB 135-140] 11. WITHOUT PREJUDICE TO THE ADDITIONAL GROUND, IT IS S UBMITTED THAT THE POWER TO CANCEL THE REGISTRATION IS GRANTED ONLY WI TH A PROSPECTIVE EFFECT. IT WOULD NOT AFFECT ASSESSMENTS IN RESPECT OF EARLIER ASSESSMENT YEARS. LD. PR. CIT (CENTRAL), BHOPAL HAS CANCELLED THE REGISTRATION U/S 12AA RETROSPECTIVELY W.E.F. 01.04. 2008. WITHOUT PREJUDICE, ORDER OF LD. PR. CIT (CENTRAL), BHOPAL DATED 29.11.2018 CAN AT BEST TAKE EFFECT ONLY FROM THE DA TE OF ORDER AND CANNOT APPLY TO COMPLETED ASSESSMENTS OF EARLIER AS SESSMENT YEARS. IT IS A SETTLED LEGAL POSITION THAT REGISTRATION CA NNOT BE CANCELLED FROM RETROSPECTIVE EFFECT. 12. RELIANCE IS PLACED ON THE DECISION OF HONBLE MADRA S HIGH COURT IN THE CASE OF AURO LAB [2019] 102 TAXMANN.COM 22 5 DTD. 23.01.2019 PARA 16 THE QUESTIONS RAISED IN THESE WRIT PETIT IONS ARE BROADLY SUMMARISED AS UNDER:............................ (III) WHAT WILL BE THE EFFECTIVE DATE ON WHICH THE PETITIONER WILL LOSE HIS REGISTRATION AND THE ENTITLEMENT TO EXEMPTION ON AC COUNT OF THE CANCELLATION ORDER DATED 30.12.2010? PARA 21 ON THE THIRD QUESTION OF THE EFFECTIVE D ATE OF OPERATION OF THE CANCELLATION ORDER, IT WAS HELD THAT THE CANCEL LATION WILL TAKE EFFECT ONLY FROM THE DATE OF THE ORDER/NOTICE OF CA NCELLATION OF REGISTRATION. SINCE THE ACT OF CANCELLATION OF REGI STRATION HAS SERIOUS CIVIL CONSEQUENCES AND THE AMENDED PROVISION IS HEL D TO HAVE ONLY A PROSPECTIVE EFFECT THE EFFECT OF CANCELLATION, IN T HE EVENT THE PENDING TAX APPEAL IS DECIDED IN FAVOUR OF THE REVENUE, WIL L OPERATE ONLY FROM THE DATE OF THE CANCELLATION ORDER, THAT IS 30 .12.2010. IN OTHER WORDS, THE EXEMPTION CANNOT BE DENIED TO THE PETITI ONER FOR AND UP TO THE ASSESSMENT YEAR 2010-11 ON THE SOLE GROUND OF C ANCELLATION OF THE CERTIFICATE OF REGISTRATION. [EMPHASIS SUPPLIE D] IN THE INSTANT CASE, ORDER U/S 12AA(3) AND 12AA(4) WAS PASSED ON 29.11.2018 BY LD. PR.CIT(CENTRAL), BHOPAL. THE REGI STRATION WAS CANCELLED W.E.F. 01.04.2008. IN VIEW OF THE ABOVE R EFERRED DECISION, IT IS SUBMITTED THAT EXEMPTION CANNOT BE DENIED FROM 0 1.04.2008 BY PASSING AN ORDER ON 29.11.2018 ON THE SOLE GROUND O F CANCELLATION OF CERTIFICATE OF REGISTRATION. C. APROPOS GROUND NO. 3, 4 AND 5 FUNDS OF THE ASSESS EE TRUST ARE USED FOR THE BENEFIT OF THE MEMBERS OF THE TRUST, A PPLICABILITY OF SHRI JAIRAM EDUCATION SOCIETY ITA NO.90 & 548/IND/2019 20 PROVISIONS OF SECTION 13(1)(C)(II) AND PROVISIONS O F SECTION 12AA(4) WHICH ARE INSERTED W.E.F. 01.10.2014 1. SHOW CAUSE NOTICE ISSUED U/S 12AA IS BASED ON THE A SSESSMENT COMPLETED IN ASSESSEES OWN CASE FOR AY 2010-11 U/S 143(3) RWS 147 IN WHICH ADDITION IS MADE BY ALLEGING THAT PROV ISIONS OF SECTION 13(1)(C) ARE VIOLATED. 2. LD. PR. CIT(CENTRAL), BHOPAL CANCELLED THE REGISTRA TION U/S 12AA BY INVOKING THE PROVISIONS OF SECTION 12AA(4). [PCI T ORDER PAGE 20 PARA 23] 3. SECTION 12AA(4) WAS INSERTED W.E.F. 01.10.2014 WHIC H PROVIDES THAT THE REGISTRATION U/S 12AA CAN BE CANCELLED FOR VIOLATION OF PROVISIONS OF SECTION 13(1). IN THE INSTANT CASE, AS MENTIONED IN THE SHOW CAUSE NOTICE, ASSESSMENT FOR AY 2010-11 WAS COMPLETED U/S 143(3) RWS 147 BY ALLEGING THAT PROVISIONS OF SECTION 13(1)(C) ARE VI OLATED. ASSESSMENT PROCEEDINGS RELATE TO AY 2010-11 I.E. A PERIOD PRIOR TO THE INSERTION OF PROVISIONS OF SECTION 12AA(4). ALLEGATION OF MISAPPROPRIATION OF FUNDS IS MADE ONL Y FOR ONE YEAR I.E. AY 2010-11 AND NOT IN ANY OTHER YEARS. NOTHING NEGA TIVE HAS BEEN OBSERVED BY THE LD. PR.CIT (CENTRAL), BHOPAL FROM T HE DATE OF GRANT OF REGISTRATION U/S 12A ON 01.04.2008 EXCEPT FOR ONLY ONE YEAR I.E. AY 2010-11. IT IS ONLY FOR AY 2010-11 THAT LD. PR. CIT (CENTRAL), BHOPAL HAS ALLEGED THAT THE FUNDS OF THE ASSESSEE ARE BEIN G USED FOR THE BENEFIT OF THE MEMBERS OF THE ASSESSEE. 4. AS MENTIONED ABOVE, SECTION 12AA(4) IS NOT APPLICAB LE IN THE INSTANT CASE FOR CANCELLATION OF REGISTRATION U/S 1 2AA WHICH LD. PR.CIT(CENTRAL), BHOPAL HAS RESORTED TO RENDERING T HE IMPUGNED ORDER BAD IN LAW. 5. WHEN THE PROVISIONS OF SECTION 13(1)(C) ARE ATTRACT ED, THE BENEFITS OF EXEMPTION UNDER SECTION 11 AND 12 ARE NOT AVAILA BLE TO THE ASSESSEE WHICH IS A SUBJECT MATTER OF THE ASSESSMEN T PROCEEDING OF THE ASSESSEE AND IT CAN IN NO WAY LEAD TO CANCELLAT ION OF REGISTRATION ALREADY ON RECORD. NOTHING COGENT AND POSITIVE HAS BEEN BROUGHT ON RECORD TO ESTABLISH IF FUNDS OF THE ASSESSEE TRUST WERE SIPHONED IN VIOLATION OF THE PROVISIONS OF LAW. 6. PROVISIONS OF SECTION 13(1)(C) OF THE ACT ARE NOT A PPLICABLE IN THE PRESENT CASE WHICH AGAIN IS A SUBJECT MATTER OF THE ASSESSMENT PROCEEDINGS AND NOT RELATING TO GRANTING OR CANCELL ATION OF REGISTRATION U/S 12A/12AA OF THE ACT. 7. IF THE PROVISIONS OF SECTION 13 ARE VIOLATED, IT EM POWERS THE ASSESSING OFFICER TO FORFEIT THE EXEMPTION PERMISSI BLE U/S 11 AND 12 THAT ALSO ONLY TO THE EXTENT OF AMOUNT NOT ALLOWED U/S 11 AND 12. HOWEVER, SUCH VIOLATION CANNOT FORM A GROUND FOR CA NCELLATION OF REGISTRATION U/S 12AA(3). 8. RELIANCE IS PLACED ON THE DECISION OF HONBLE MUMBA I BENCH OF ITAT IN THE CASE OF LILAVATI KIRTILAL MEHTA MEDICAL TRUST [2019] 108 TAXMANN.COM 272 DTD. 12.06.2019 SHRI JAIRAM EDUCATION SOCIETY ITA NO.90 & 548/IND/2019 21 HEAD NOTE - SECTION 12AA OF THE INCOME-TAX ACT, 196 1 - CHARITABLE OR RELIGIOUS TRUST - REGISTRATION PROCEDURE (CANCEL LATION OF REGISTRATION) - ASSESSEE-TRUST WAS FORMED WITH AN OBJECT OF RUNNI G A HOSPITAL AND RESEARCH CENTRE - IT WAS GRANTED REGISTRATION UNDER SECTION 12A IN YEAR 1979 AND SINCE THEN ASSESSEE HAD BEEN CLAIMING BENEFIT OF EXEMPTION PRESCRIBED UNDER SECTIONS 11 AND 13 - SUB SEQUENTLY, COMMISSIONER TOOK A VIEW THAT MANNER OF INVESTMENT OF TRUST FUNDS WAS IN VIOLATION OF PROVISIONS OF SECTION 13 - HE T HUS PASSED AN ORDER UNDER SECTION 12AA(3) CANCELLING REGISTRATION GRANT ED TO ASSESSEE- TRUST - WHETHER VIOLATION OF PROVISIONS OF SECTION 13 EMPOWERS AN ASSESSING AUTHORITY TO FORFEIT EXEMPTIONS PERMISSIB LE UNDER SECTIONS 11 AND 12 BUT SUCH A VIOLATION CANNOT FORM A GROUND TO CANCEL REGISTRATION BY PASSING AN ORDER UNDER SECTION 12AA (3) - HELD, YES - WHETHER IN VIEW OF AFORESAID LEGAL POSITION, IMPUGN ED ORDER CANCELLING REGISTRATION GRANTED TO ASSESSEE-TRUST W AS TO BE SET ASIDE - HELD, YES [PARAS 11 AND 12] [IN FAVOUR OF ASSESSEE] [CLPB 141-152] IN THE INSTANT CASE, REGISTRATION GRANTED U/S 12AA WAS CANCELLED BY INVOKING PROVISIONS OF SECTION 12AA(3) AND 12AA(4) READ WITH SECTIONS 13(1)(C)(II) AND SECTION 13(3). VIOLATION OF PROVISIONS OF SECTION 13 CANNOT BE A BASIS FOR CANCELLATION OF REGISTRATI ON U/S 12AA. IMPUGNED ORDER CANCELLING THE REGISTRATION U/S 12AA OUGHT TO BE QUASHED. D. APROPOS GROUND NO. 7 PAYMENT OF EXCESS SALARY, FU NDS OF THE CHARITABLE TRUST WERE SIPHONED OUT AND USED BY THE MEMBERS OF THE CHARITABLE SOCIETY, FEE RECEIPTS NOT FULLY REFLECTE D IN THE AUDITED ACCOUNTS 1. LD. PR. CIT(CENTRAL), BHOPAL HAS MADE REFERENCE TO VARIOUS ROUGH NOTINGS, JOTTINGS AND CALCULATIONS APPEARING IN THE VARIOUS LOOSE PAPERS AND HAS DRAWN INFERENCES ON THE BASIS OF SUC H LOOSE PAPERS FOUND IN THE SEARCH OF SHRI PRAKASH HARIRAMANI FROM HIS RESIDENCE. 2. NOTHING CORROBORATIVE HAS BEEN BROUGHT ON RECORD TO ESTABLISH A. SALARY WAS PAID TO NON EXISTING EMPLOYEES B. HIGHER SALARY WAS PAID BY CHEQUE AND DIFFERENCE WAS REPAID BY THE EMPLOYEES IN CASH C. ENTIRE INCOME IS NOT SHOWN IN THE BOOKS OF ACCOUNTS D. FEE RECEIPTS ARE NOT FULLY REFLECTED IN THE BOOKS O F ACCOUNTS 3. LD. PR. CIT(CENTRAL), BHOPAL HAS MERELY REFERRED TO THE DOCUMENTS SEIZED FROM THE RESIDENTIAL PREMISES OF SHRI PRAKAS H HARIRAMANI BASED ON WHICH THE PAYMENT OF SALARY IS ALLEGED AS BOGUS AND PAID TO NON EXISTING EMPLOYEES. NO POSITIVE AND COGENT M ATERIAL IN THE FORM OF STATEMENT OF ANY OF THE EMPLOYEES HAS BEEN BROUGHT ON RECORD. THERE IS NO CORROBORATIVE EVIDENCE THAT THE SHORTAGE OF CASH SHRI JAIRAM EDUCATION SOCIETY ITA NO.90 & 548/IND/2019 22 INDICATE THAT ONE OF THE TRUSTEE HAS TAKEN EXCESS C ASH GENERATED ON ACCOUNT OF BOOKING BOGUS SALARY. 4. NOTHING HAS BEEN BROUGHT ON RECORD TO ESTABLISH THA T HIGHER AMOUNT OF SALARY WAS PAID IN CHEQUE AND THEREAFTER THE DIFFERENCE AMOUNT WAS REPAID BY THEM TO THE MEMBERS OF THE ASS ESSEE SOCIETY. IT IS ALLEGED MERELY ON SURMISES AND CONJECTURES TH AT TRUSTEES SIPHONED THE FUNDS OF THE INSTITUTION BY BOOKING BO GUS SALARIES. 5. RELIANCE IS PLACED ON THE FOLLOWING JUDICIAL PRECED ENTS OF THE HONBLE SUPREME COURT WHEREIN IT IS HELD THAT IN TH E ABSENCE OF SUCH INDEPENDENT AND CORROBORATIVE EVIDENCES, THE ROUGH NOTINGS AND JOTTINGS HAVE NO EVIDENTIARY VALUE, NO ADDITION IS PERMISSIBLE ON THE BASIS OF LOOSE PAPER A. COMMON CAUSE (A REGISTERED SOCIETY) V. UNION OF IND IA [2017] 77 TAXMANN.COM 245 (SC) B. CENTRAL BUREAU OF INVESTIGATION V. V.C. SHUKLA & OT HERS [1998] 3 SCC 410 (SC) 6. ASSESSEE SUBMITTED THE DETAILS OF NUMBER OF STUDENT S ENROLLED AND STUDYING IN VARIOUS COURSES LIKE M. TECH, MBA, BE, DIPLOMA, ETC. THERE ARE 1635 STUDENTS STUDYING IN VARIOUS COURSES IN THIS INSTITUTE. [PB 30] 7. APPROVALS FROM THE VARIOUS GOVERNMENT REGISTERED BO DIES NAMELY [PB 32-41]: A. ALL INDIA COUNCIL FOR TECHNICAL EDUCATION (AICTE) F OR ACADEMIC YEAR 2016-17 AND 2017-18, B. NATIONAL COUNCIL FOR TEACHER EDUCATION (NCTE) WHICH CONDUCTS PHYSICAL VERIFICATION C. AFFILIATED WITH RAJIV GANDHI PROUDYOGIKI VISHWAVIDY ALA D. AFFILIATED WITH BARKATULLAH UNIVERSITY, BHOPAL 8. RECOGNITION FROM NATIONAL COUNCIL FOR TEACHER EDUCA TION, A STATUTORY BODY OF THE GOVERNMENT OF INDIA REQUIRES INTER ALIA, THE APPLICANT EDUCATIONAL INSTITUTE TO CLEAR PHYSICAL I NSPECTION BY WAY OF INPUT FROM THE VISITING TEAM IN THE FORM OF REPORT AND VIDEOGRAPHY AND RECOMMENDATION OF THE STATE GOVERNMENT. HAVING GONE THROUGH THESE PROCESSES FOR RECOGNITION FROM A STATUTORY BO DY OF GOVERNMENT OF INDIA ITSELF ESTABLISHES THE CARRYING OUT OF EDU CATION BY THE ASSESSEE. [PB 34] 9. IT IS SUBMITTED THAT THE BOOKS OF ACCOUNT OF THE AS SESSEE SOCIETY ARE DULY AUDITED. NO ADVERSE REMARKS HAVE BEEN MADE BY THE AUDITOR. LD. PR. CIT(CENTRAL), BHOPAL WITHOUT BRING ING ON RECORD COGENT AND POSITIVE MATERIAL CONCLUDED THAT THE FEE RECEIPTS ARE NOT FULLY REFLECTED IN THE AUDITED FINANCIALS. 10. THE DOCUMENT SEIZED FROM THE RESIDENTIAL PREMISES O F SHRI PRAKASH HARIRAMANI CONTAINS ROUGH NOTINGS AND JOTTI NGS AND THE DIFFERENCE IN NO CASE CAN BE TREATED AS UNDER RECOR DING OF FEE RECEIPTS. THESE NOTINGS AND JOTTINGS ARE PROJECTION S/ESTIMATION OF THE COLLECTION OF FEES AND DO NOT REFLECTS THE ACTUAL C OLLECTION OF FEES. SHRI JAIRAM EDUCATION SOCIETY ITA NO.90 & 548/IND/2019 23 11. ASSESSEE PREFERRED AN APPEAL BEFORE LD. CIT(A) AGAI NST ORDER PASSED U/S 143(3) RWS 147 FOR AY 2010-11. BEFORE LD . CIT(A), ASSESSEE ALONG WITH OTHER GROUNDS RAISED THE FOLLOW ING GROUNDS OF APPEAL A. DISALLOWANCE OF EXPENDITURE OF RS. 3,52,94,416 AND [PB 97, GROUND NO. 3] B. ADDITION ON CONCEALMENT OF FEES OF RS. 69,70,505 [P B 98, GROUND NO. 7] LD. CIT(A) ACCEPTED THE AUDITED BOOKS OF ACCOUNTS O F THE ASSESSEE. LD. CIT(A) ALLOWED THE GROUND RAISED ON DISALLOWANC E OF EXPENDITURE OF RS. 3,25,94,416 WHICH PERTAINS TO RUNNING AND MA INTAINING THE EDUCATIONAL INSTITUTE. DEPARTMENT IS NOT IN APPEAL AGAINST THIS RELIEF GRANTED BY THE LD. CIT(A). [PB 116] FOR THE ADDITION MADE ON ACCOUNT OF CONCEALMENT OF FEES OF RS. 69,70,505, LD. CIT(A) RESTRICTED THIS ADDITION TO R S. 8,47,694 AND RELIEF OF RS. 61,22,811 WAS GRANTED. DEPARTMENT IS NOT IN APPEAL AGAINST THIS RELIEF GRANTED BY THE LD. CIT(A). [PB 117] 12. LD. PR. CIT(CENTRAL), BHOPAL ERRED IN NOT CONSIDERI NG THE SUBMISSIONS MADE BY THE ASSESSEE AND PROCEEDED TO A LLEGE THAT THE FUNDS ARE SIPHONED AND THE FEES ARE NOT FULLY REFLE CTED. CONSIDERING THE ABOVE FACTS, CIRCUMSTANCES OF THE C ASE, SUBMISSIONS MADE, DOCUMENTS ON RECORD AND JUDICIAL PRECEDENTS, CANCELLATION OF REGISTRATION U/S 12AA(3) AND 12AA(4) IS BAD IN LAW, INVALID, ILLEGAL, WITHOUT JURISDICTION AND OUGHT TO BE RESTORED WITH EFFECT FROM 01.04.2008 I.E. ORIGINAL DATE OF GRANTING OF REGIST RATION. 9. PER CONTRA LD. DR FURTHER REFERRED TO THE ORDER U/S 127 OF THE ACT DATED 23.11.2016 ISSUED BY CIT(E), BHOPAL THROU GH WHICH GROUP CASES UNDER CIT(E) WERE CENTRALIZED UNDER THE CIT(CENTRAL)- 2, BHOPAL FOR THE PURPOSE OF MEANINGFUL INVESTIGATI ON AND ASSESSMENT IN THE CASE OF RAMANI GROUP, BHOPAL. AT THE OUTSET, RELEVANT CONTENTS OF PROVISION OF SECTION 127 OF TH E ACT ARE REPRODUCED HEREUNDER FOR CONVENIENCE: SHRI JAIRAM EDUCATION SOCIETY ITA NO.90 & 548/IND/2019 24 SECTION 127 OF THE I. TAX ACT [POWER TO TRANSFER CASES. 127. (1) THE DIRECTOR GENERAL OR CHIEF COMMISSIONER OR COMMISSIONER MAY, AFTER GIVING THE ASSESSEE A REASONABLE OPPORTUNITY OF BEING HEARD IN THE MATTER, WHEREVER IT IS POSSIBLE TO DO SO, AND AFTER R ECORDING HIS REASONS FOR DOING SO, TRANSFER ANY CASE FROM ONE OR MORE ASSESSI NG OFFICERS SUBORDINATE TO HIM (WHETHER WITH OR WITHOUT CONCURR ENT JURISDICTION) TO ANY OTHER ASSESSING OFFICER OR ASSESSING OFFICERS (WHET HER WITH OR WITHOUT CONCURRENT JURISDICTION) ALSO SUBORDINATE TO HIM. (2) WHERE THE ASSESSING OFFICER OR ASSESSING OFFICE RS FROM WHOM THE CASE IS TO BE TRANSFERRED AND THE ASSESSING OFFICER OR A SSESSING OFFICERS TO WHOM THE CASE IS TO BE TRANSFERRED ARE NOT SUBORDIN ATE TO THE SAME DIRECTOR GENERAL OR CHIEF COMMISSIONER OR COMMISSIONER,- A. WHERE THE DIRECTORS GENERAL OR CHIEF COMMISSIONE RS OR COMMISSIONERS,. TO WHOM SUCH ASSESSING OFFICERS ARE SUBORDINATE ARE IN AGREEMENT, THEN THE DIRECTOR GENERAL OR CHIE F COMMISSIONER OR COMMISSIONER FROM WHOSE JURISDICTION THE CASE IS TO BE TRANSFERRED MAY, AFTER GIVING THE ASSESSEE A REASONABLE OPPORTU NITY OF BEING HEARD IN THE MATTER, WHEREVER IT IS POSSIBLE TO DO SO, AND AFTER RECORDING HIS REASONS FOR DOING SO, PASS THE ORDER; (B) WHERE THE DIRECTORS GENERAL OR CHIEF COMMISSIONERS OR COMMISSIONERS AFORESAID ARE NOT IN AGREEMENT, THE O RDER TRANSFERRING THE CASE MAY, SIMILARLY, BE PASSED BY THE BOARD OR ANY SUCH DIRECTOR GENERAL OR CHIEF COMMISSIONER OR COMMISSIONER AS TH E BOARD MAY, BY NOTIFICATION IN THE OFFICIAL GAZETTE, AUTHORISE IN THIS BEHALF. (3) NOTHING IN SUB- SECTION (1) OR SUB- SECTION (2) SH ALL BE DEEMED TO REQUIRE ANY SUCH OPPORTUNITY TO BE GIVEN WHERE THE TRANSFER IS FROM ANY ASSESSING OFFICER OR ASSESSING OFFICERS (WHETHE R WITH OR WITHOUT CONCURRENT JURISDICTION) TO ANY OTHER ASSESSING OFF ICER OR ASSESSING OFFICERS (WHETHER WITH OR WITHOUT CONCURRENT JURISD ICTION) AND THE OFFICES OF ALL SUCH OFFICERS ARE SITUATED IN THE SA ME CITY, LOCALITY OR PLACE. (4) THE TRANSFER OF A CASE UNDER SUB- SECTION (1) OR S UB- SECTION (2) MAY BE MADE AT ANY STAGE OF THE PROCEEDINGS, AND SH ALL NOT RENDER NECESSARY THE RE- ISSUE OF ANY NOTICE ALREADY ISSUE D BY THE ASSESSING OFFICER OR ASSESSING OFFICERS FROM WHOM THE CASE IS TRANSFERRED. EXPLANATION.- IN SECTION 120 AND THIS SECTION, THE WORD' CASE', IN RELATION TO ANY PERSON WHOSE NAME IS SPECIFIED IN A NY ORDER OR DIRECTION ISSUED THEREUNDER, MEANS ALL PROCEEDINGS UNDER THIS ACT IN RESPECT OF ANY YEAR WHICH MAY BE PENDING ON THE DAT E OF SUCH ORDER OR DIRECTION OR WHICH MAY HAVE BEEN COMPLETED ON OR BEFORE SUCH DATE, AND INCLUDES ALSO ALL PROCEEDINGS UNDER THIS ACT WHICH MAY BE COMMENCED AFTER THE DATE OF SUCH ORDER OR DIRECTION IN RESPECT OF ANY YEAR.] 10. LD. DEPARTMENTAL REPRESENTATIVE(DR) APART FROM RELYING ON SHRI JAIRAM EDUCATION SOCIETY ITA NO.90 & 548/IND/2019 25 THE DETAILED FINDING OF LD. CIT(A) AS ALSO REFERRED TO THE FOLLOWING WRITTEN SUBMISSIONS PLACED ON RECORD: 4.2) IN SUPPORT OF GROUNDS OF APPEAL, THE APPELLANT HAS TAKEN PLEA THAT CBDT NOTIFICATION NO. 52 AND 53 DT. 22110/2014 MAKE S IT CLEAR THAT CIT(EXEMPTION), BHOPAL SHALL HAVE THE POWER FOR THE JURISDICTION OF THE TERRITORIAL AREA OF THE STATES OF MP AND CHATTISGAR H AND DOES NOT SPECIFY IF THE CIT(EXEMPTION) CAN TRANSFER ITS POWER OR JUR ISDICTION TO OTHER CIT OR PRO CIT. IN THIS CONNECTION IT IS SUBMITTED THAT A PLAIN REA DING OF CLAUSE (A) OF SEC 127(2), CLEARLY INDICATES THAT ANY CASE CAN BE TRAN SFERRED FROM ONE AO TO ANOTHER AO. FURTHER ALSO, THE EXPLANATION TO SEC 12 7 MAKES IT CLEAR THAT THE WORD 'CASE', IN RELATION TO ANY PERSON WHOSE NA ME IS SPECIFIED IN ANY ORDER OR DIRECTION ISSUED THERE UNDER, MEANS AL L PROCEEDINGS UNDER THIS ACT IN RESPECT OF ANY YEAR WITH THE TRANSFER OF THE CASE, PAN OF THE CASE IS A LSO TRANSFERRED TO THE CASE RECEIVING AO. AND, RESULTANTLY, ALL PROCEEDING S PENDING ON THE DATE OF SUCH TRANSFER ORDER IS ALSO TRANSFERRED. HENCE, THE APPELLANT'S PLEA THAT SECTION 127 DOES NOT PROVIDE FOR TRANSFER OF P OWER FROM ONE CIT TO ANOTHER CIT, DOES NOT HOLD STRENGTH AND THEREFORE, IS NOT ACCEPTABLE. 4.3) APPELLANT'S SUBMISSION THAT THE PROCEEDINGS U/S 127 ARE LIMITED ONLY FOR THE PURPOSE OF CO-ORDINATED ASSESSMENTS, I S NOT AT ALL ACCEPTABLE AS SECTION 127 DOES NOT CREATE ANY SUCH BINDING. 4.4) THE APPELLANT HAS SUBMITTED THAT IN THE INSTAN T CASE, NOTHING IS AVAILABLE ON RECORD TO ESTABLISH IF ANY ORDER/APPRO VAL HAS BEEN TAKEN FROM HIGHER AUTHORITIES IN WRITING FOR TRANSFERRING THE CASE TO LD. PRO CIT(CENTRAL) AND IF ANY OPPORTUNITY OF BEING HEARD WAS GIVEN. THIS PLEA OF THE APPELLANT DOES NOT HOLD ANY STRENG TH IN VIEW OF PROVISION OF SUB SEC 3 OF 127 WHICH EMPHASISES THAT' NOTHING IN SUB-SECTION (1) OR SUB-SECTION (2) SHALL BE DEEMED TO REQUIRE ANY SUCH OPPORTUNITY TO BE GIVEN WHERE THE TRANSFER IS FROM ANY ASSESSING OFFI CER OR ASSESSING OFFICERS (WHETHER WITH OR WITHOUT CONCURRENT JURISD ICTION) TO ANY OTHER ASSESSING OFFICER OR ASSESSING OFFICERS (WHETHER WI TH OR WITHOUT CONCURRENT JURISDICTION) AND THE OF ICES OF ALL SUC H OFFICERS ARE SITUATED IN THE SAME CITY, LOCALITY OR PLACE. 4.5) THE APPELLANT HAS PLACED RELIANCE IN THE ITAT, INDORE'S DECISION IN THE CASE OF CHIRAYU CHARITABLE FOUNDATION I ITA NO. L79 IIND/2019 , FACTS OF WHICH CASE DOES NOT SQUARELY RELATES TO TH E PRESENT CASE. MOREOVER, THE ADDITIONAL GROUND RAISED BY THE APPEL LANT IS REGARDING CHALLENGE OF JURISDICTION OF THE PR.CIT(C), IS NOT A SUBJECT IN THE CITATION REFERRED. 4.6) THE APPELLANT HAS TAKEN GROUND THAT INSTANT EX ERCISE RELATING TO REVOCATION OF REGISTRATION OF THE ASSESSEE IS WITHO UT JURISDICTION. SECTION 12AA READ WITH RULE 17 A AND CBDT CIRCULAR NO. 584 DATED 13.11.1990 REQUIRES THAT WHILE SEEKING REGISTRATION U/S 12A I 12AA, THE APPLICATION IS OUGHT TO BE MADE TO JURISDICTIONAL COMMISSIONER I DIRECTOR OF INCOME TAX (EXEMPTION). POWERS ENTRUSTED U/S 12A112AA ARE TO BE EXERCISED SHRI JAIRAM EDUCATION SOCIETY ITA NO.90 & 548/IND/2019 26 BY THE JURISDICTIONAL COMMISSIONER I DIRECTOR OF INCOME TAX (EXEMPTION) WHICH INCLUDE BOTH, GRANTING OF THE REGISTRATION AN D THE CANCELLATION THEREOF. THE ONE WHO CANNOT GRANT THE REGISTRATION ALSO CANNOT TRANSFER OF CASES RELATES TO TRANSFER OF A CASE FROM ONE ASS ESSING OFFICER TO ANOTHER ASSESSING OFFICER. MATTERS RELATING TO GRAN TING AND CANCELLATION OF REGISTRATION U/S 12A112AA ARE NOT THE SUBJECT MA TTERS TO BE DEALT BY THE ASSESSING OFFICER BUT BY JURISDICTIONAL COMMISS IONER I DIRECTOR OF INCOME TAX (EXEMPTION). PLEA OF THE APPELLANT THAT CBDT CIRCULAR NO. 584 DA TED 13.11.1990 REQUIRES THAT WHILE SEEKING REGISTRATION U/S 12A I 12AA, THE APPLICATION IS OUGHT TO BE MADE TO JURISDICTIONAL COMMISSIONER I DIRECTOR OF INCOME TAX (EXEMPTION) IS PERUSED AND IT IS FOUND THAT CON TENTS MENTIONED THEREIN APPLY TO CASES WHERE THE ASSESSEE CONCERNED IS A PERSON CLAIMING EXEMPTION UNDER ANY OF THE PROVISIONS MENT IONED ABOVE AND WAS ASSESSED BY ANY INCOME-TAX AUTHORITY HAVING HEA DQUARTERS AT FOUR METROPOLITAN CITIES OF DELHI, BOMBAY, CALCUTTA AND MADRAS. SO, ON THIS GROUND, APPELLANT'S GROUND IS REJECTED. FURTHER, REFERENCE HAS BEEN MADE BY THE APPELLANT T O RULE 17 A. IN THIS CONNECTION, IT IS SUBMITTED THAT RULE 17 A OF THE 1 . TAX RULES, LAYS THE PROCEDURAL GUIDELINES AS TO HOW TO SUBMIT APPLICATI ON FOR REGISTRATION OF CHARITABLE OR RELIGIOUS TRUSTS AND DOES NOT SAY ANY THING AS TO WHOM THE APPLICATION FOR REGISTRATION IS TO BE MADE. HOWEVER , IT IS CLEARLY MENTIONED UNDER SEC 12 AA AS TO WHO CAN PASS THE OR DER GRANTING REGISTRATION. IN THE SAID SECTION, IT IS CLEARLY ME NTIONED THAT PR. CIT OR CIT SHALL PASS THE REQUISITE ORDER GRANTING REGISTR ATION. FURTHER, UNDER SUB SEC 3 AND 4 OF SEC 12AA, IT IS CLEARLY WRITTEN THAT PR. CIT OR CIT SHALL PASS .HE ORDER OF CANCELLATION OF REGISTRATION ALRE ADY GRANTED, IF OTHER CONDITIONS ARE FULFILLED. HENCE, IN VIEW OF THE ABOVE FINDINGS, APPELLANT'S P LEA THAT MATTERS RELATING TO GRANTING AND CANCELLATION OF REGISTRATI ON U/S 12A112AA ARE THE SUBJECT MATTERS TO BE DEALT BY THE JURISDICTION AL COMMISSIONER / DIRECTOR OF INCOME TAX (EXEMPTION) DOES NOT HOLD AN Y STRENGTH AND IS UNACCEPTABLE. B. ANOTHER GROUND OF THE APPELLANT IS REGARDING CAN CELLATION OF REGISTRATION BASED ON THE APPLICABILITY OF PROVISIO N OF SECTION 13(1 )( C), RETROSPECTIVE CANCELLATION OF REGISTRATION BY APPLICATION OF PROVISIONS OF SECTION 12AA( 4) AND ON APPLICABILITY OF SECTION 12AA(3). IN REGARD TO THE ABOVE, THE APPELLANT HAS RESORTED TO DIFFERENT GROUNDS WHICH ARE AS UNDER: 5.1) IN THE INSTANT CASE ALLEGATION OF MISAPPROPRIA TION OF FUNDS MADE ONLY FOR ONE YEAR I.E. A.Y. 2010-11 AND NOT IN ANY OTHER YEARS. HOWEVER, FOR THE ENTIRE PERIOD FROM THE DATE OF GRANT OF REG ISTRATION U/S 12A ON 01.04.2008, LD. PR. CIT(CENTRAL), BHOPAL HAS OBSERV ED THAT THE AFFAIRS OF THE ASSESSEE ARE NOT GENUINE AND ARE NOT BEING CARR IED OUT IN ACCORDANCE OF THE OBJECTS OF THE APPELLANT AND ALSO THE FUNDS OF THE ASSESSEE ARE BEING USED FOR THE BENEFITS OF THE MEM BERS OF THE ASSESSEE. 5.2) PR. CIT(CENTRAL), BHOPAL HAS CANCELLED THE REG ISTRATION U/S 12AA SHRI JAIRAM EDUCATION SOCIETY ITA NO.90 & 548/IND/2019 27 WITH EFFECT FROM 01.04.2008 (WITH RETROSPECTIVE EFF ECT). 5.3) IF THE PROVISION OF SECTION 13 ARE VIOLATED, T HEN THE ASSESSING OFFICER IS EMPOWERED TO FORFEIT THE EXEMPTION PERMISSIBLE U/S 11 & 12 AND THAT ALSO TO THE EXTENT OF AMOUNT NOT ALLOWED U/S 11 & 12 IT IS ALSO ADDED BY THE APPELLANT THAT SUCH VIOLATION CANNOT F ORM A GROUND FOR CANCELLATION OF REGISTRATION U/S 12AA(3). THE APPELLANT HAS PLACED RELIANCE ON VARIOUS DECISIONS IN SUPPORT OF HIS GRO UND. COMMENTS: 6.1) THOUGH, THE CASE OF THE APPELLANT WAS REOPENED FOR ASSESSMENT PERTAINING TO A.Y. 2010- 11 AND SUBSEQUENT TO THAT, ON THE BASIS OF DISCREPANCIES AND IRREGULARITIES NOTICED BY THE A.O . DURING THE COURSE OF ASSESSMENT, PROPOSAL FOR CANCELLATION OF REGISTRATI ON GRANTED TO THE APPELLANT U/S 12A WAS MADE. THAT THE ORDER U/S 12AA(3) AND 12AA(4 ) 'AS PASSED BY THE LD. PR. CIT(CENTRAL), BHOPAL WITH RETROSPECTIVE EFFECT, IS TOTALLY BASED ON DISCREPANCIES FOUND BY THE PRO CIT (CENTRAL), BHOPAL AND IT IS CLEARLY MADE PART OF THE ORDER ALSO. 6.2 THE APPELLANT HAS MADE SUBMISSION THAT IF THE P ROVISION OF SECTION 13 ARE VIOLATED, THEN THE LD. AO IS EMPOWERED TO FO RFEIT THE EXEMPTION PERMISSIBLE U/S 11 & 12 AND THAT ALSO TO THE EXTENT OF AMOUNT NOT ALLOWED U/S 11 & 12 IT IS ALSO ADDED BY THE APPELLANT THAT SUCH VIOLATION CANNOT FORM A GROUND CANCELLATION OF REGI STRATION U/S 12AA(3). THE APPELLANT HAS PLACED RELIANCE ON VARIOUS DECISI ONS IN SUPPORT OF HIS GROUND. THE APPELLANT SUBMISSION THAT FOR THE VIOLATION OF SECTION 13, THE A.O. IS EMPOWERED TO FORFEIT TEE EXEMPTION U/S 11 & 12 LIMITED TO THE EXTENT OF AMOUNT NOT ALLOWED U/S 11 & 12, HAS NO BASE, AS NOWHERE, IN SECTION 11 & SECTION 12, SUCH THINGS ARE MENTIONED. THE APPELLAN T HAS RESORTED TO VARIOUS DECISIONS IN THIS REGARD, HOWEVER, IT IS FOUND THAT THE FACTS OF THE CASE IN THESE CITATIONS ARE NOT IDENTICAL TO TH E PRESENT CASE. 11. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORDS PLACED BEFORE US AND CAREFULLY GONE THROUGH DECISIO NS REFERRED AND RELIED BY THE LD. COUNSEL FOR THE ASSESSEE AND THE PAPER BOOK AND SUBMISSION MADE BY THE LD. DR. APROPOS TO THE ADDITIONAL GROUND OF APPEALS RAISED BY THE ASSESSEE CONTENDING THAT BOTH THE IMPUGNED ORDER AN D NOTICE ISSUED U/S 12AA OF THE ACT ARE BAD IN LAW, INVALID, ILLEGAL AND WITHOUT JURISDICTION, THE CRUX OF THE ARGUMENTS AND SUBMISSIONS SHRI JAIRAM EDUCATION SOCIETY ITA NO.90 & 548/IND/2019 28 MADE BEFORE US BY THE LD. COUNSEL FOR THE ASSESSEE IS THAT IN VIEW OF THE PROVISIONS OF SECTIONS 127 & 129 OF THE ACT AND THE NOTIFICATION ISSUED BY CENTRAL BOARD OF DIRECT TAXE S NO.52/2014 & 53/2014 DATED 22.10.2014, LD. CIT(E) CANNOT BE TR ANSFER HIS POWERS AND DUTY TO ANOTHER CIT OF THE SAME RANK TO CANCEL THE REGISTRATION GRANTED U/S 12AA OF THE ACT. 12. AVERTING TO THE FACTS OF THE INSTANT CASE, SEAR CH AS CONDUCTED U/S 132 OF THE ACT AT RAMANI GROUP. IT IS ALSO NOT IN DISPUTE THAT VARIOUS LOOSE PAPERS ALLEGED TO BE INCRIMINATING IN NATURE WERE FOUND DURING THE COURSE OF SEARCH. IT IS A NORMAL P ROCEDURE THAT SUBSEQUENT TO SEARCH ALL THE CASES RELATING TO THE GROUP ARE CENTRALIZED WITH CENTRAL CIRCLE FOR MAKING ASSESSME NT BY THIS PROCESS OF CENTRALIZATION, IT ALSO BECOMES EASY FOR THE LD. ASSESSING OFFICER TO ASSESS THE INCOME ALONG WITH R EFERRING THE SEIZED MATERIAL WHICH INTERCONNECTED AND RELATING T O GROUP CONCERNS/ASSOCIATES/INDIVIDUALS. 13. IN THE INSTANT CASE, ORDER U/S 127(2) OF THE AC T DATED 23.11.2016 WAS PASSED BY THE CIT(E), BHOPAL. COPY O F THIS ORDER IS REPRODUCED BELOW: SHRI JAIRAM EDUCATION SOCIETY ITA NO.90 & 548/IND/2019 29 14. FROM PERUSAL OF THE ABOVE ORDER, WE FIND THAT T HE JURISDICTION OF THE ASSESSEE HAS BEEN TRANSFERRED FROM DCIT(E), BHOPAL TO ACIT(CENTRAL)-2 BHOPAL. WE ALSO NOTE THAT THE PERMA NENT ACCOUNT NO. OF THE ASSESSEE HAVE BEEN MIGRATED TO THE ACIT( CENTRAL)-2 BHOPAL. THIS ORDER CAME TO FORCE W.E.F. 23.11.2016. THOUGH SHRI JAIRAM EDUCATION SOCIETY ITA NO.90 & 548/IND/2019 30 ASSESSEE HAS REFERRED TO VARIOUS JUDICIAL PRONOUNCE MENTS IN ITS REPORTS BUT THE SAME WILL NOT BE OF ANY SUPPORT TO THE ASSESSEE SINCE THE JURISDICTION HAS BEEN TRANSFERRED AFTER F OLLOWING THE PROCEDURE PROVIDED UNDER THE ACT AND RULES OF THE I NCOME TAX ACT, ALONG WITH PASSING AN OFFICIAL ORDER U/S 127(2 ) OF THE ACT WHICH FINDS NO AMBIGUITY WITH REGARD TO THE CORRECT ASSUMPTION OF JURISDICTION BY LD. PR. CIT(CENTRAL) FOR CONDUCTING THE PROCEEDINGS U/S 12AA OF THE ACT. AFTER GOING THROUGH THIS OFFIC E ORDER DATED 23.11.2016 GIVEN U/S 127(2) OF THE ACT, SUBMISSION MADE BY THE LD. DR THROUGH WHICH REVENUE HAS REBUTTED TO ALL TH E CONTENTIONS MADE BY THE ASSESSEE, WE FIND NO MERIT IN THE ADDIT IONAL GROUNDS RAISED BY THE ASSESSEE BEFORE US CHALLENGING THE JU RISDICTION OF LD. PR. CIT(CENTRAL), BHOPAL, SINCE THIS JURISDICTION H AS BEEN ASSUMED BY THE OFFICIAL ORDER GIVEN BY THE MINISTRY OF FINA NCE DEPARTMENT OF REVENUE U/S 127(2) OF THE ACT ALONG WITH TRANSFE RRING PAN OF THE ASSESSE SOCIETY FROM DCIT(E), BHOPAL TO ACIT(CE NTRAL) -2 BHOPAL. ONCE THE PAN IS MIGRATED THEN CIT(E) SEIZE TO HAVE ANY JURISDICTION OVER THE ASSESSEE WITH REGARD TO ANY O F PROCEEDINGS UNDER THE ACT. WE ACCORDINGLY DISMISS THE ADDITIONA L GROUNDS RAISED BY THE ASSESSEE. SHRI JAIRAM EDUCATION SOCIETY ITA NO.90 & 548/IND/2019 31 15. APROPOS TO GROUND NO.1, 2 & 6 ASSESSEE HAS CHAL LENGED THE CANCELLATION OF REGISTRATION U/S 12AA OF THE ACT RE TROSPECTIVELY W.E.F. 01.04.2008 BY INVOKING PROVISIONS OF SECTION 12AA(3) & 12AA(4) OF THE ACT. WE OBSERVE THAT THE ASSESSEE SO CIETY IS REGISTERED UNDER M.P. SOCIETY REGISTRATION ACT 1973 AND ENJOYING THE BENEFIT OF SECTION 12AA OF THE ACT VIDE ORDER U /S 12AA OF THE ACT DATED 20 TH MARCH 2008. THE PROCEEDINGS U/S 12AA(3) & 12AA(4) OF THE ACT WERE INITIATED SUBSEQUENT TO SEA RCH PROCEEDING CARRIED OUT ON RAMANI GROUP ON 30 TH AUGUST 2016. CERTAIN LOOSE PAPERS WERE FOUND HAVING SOME DETAILS OF SALARY PAY MENTS, CALCULATION OF HIGHER SALARY, CASH PAYMENT, HAND WR ITTEN DETAILS OF INCOME AND EXPENDITURE WHICH HAVE BEEN CLAIMED BY T HE ASSESSEE TO BE DUMB DOCUMENTS AND THE DETAILED DISCUSSION WI TH REGARD TO THESE DOCUMENTS WILL BE DEALT BY US IN THE SUBSEQUE NT PARAS. BASED ON THESE DOCUMENTS LD. PR. CIT HAS ALLEGED TH AT THE FUNDS OF THE SOCIETY HAVE BEEN USED FOR THE BENEFIT OF ME MBERS OF THE SOCIETY AND BOGUS EXPENDITURE HAS BEEN CLAIMED. APA RT FROM THESE ALLEGATION BASED ON THE ALLEGED LOOSE PAPERS NO DOUBT HAS BEEN RAISED AT ANY POINT OF TIME BY THE REVENUE AUT HORITIES ABOUT THE GENUINENESS OF CHARITABLE ACTIVITY CARRIED OUT BY THE ASSESSEE AND THE ACTIVITIES OF IMPARTING EDUCATION TO THE ST UDENTS. SHRI JAIRAM EDUCATION SOCIETY ITA NO.90 & 548/IND/2019 32 15A. FOR GRANTING REGISTRATION U/S 12AA OF THE ACT LD. PR. CIT/CIT HAS TO BE SATISFIED THAT THE TRUST OF SOCIETY OR IN STITUTIONS IS RUNNING FOR CHARITABLE OBJECTS AND ACTIVITIES IS CA RRIED OUT ARE GENUINE IN NATURE. IN THE INSTANT CASE, THE SEIZED MATERIAL RELIED UPON DOES NOT ESTABLISH THAT THE ACTIVITIES OF THE ASSESSEE ARE NOT GENUINE AND ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH OBJECTS. IT IS MERELY ON THE BASIS OF CERTAIN LOOSE PAPERS F OUND AND SEIZED DURING THE SEARCH OPERATION CARRIED OUT IN THE CASE OF PRAKASH HARI RAMANI(RELATED TO RAMANI GROUP) AT HIS RESIDEN CE THAT LD. PR. CIT(CENTRAL) PRECEDED TO CANCEL THE REGISTRATIO N GRANTED EARLIER. 15B.WE FIND THAT RECENTLY THIS TRIBUNAL IN THE CASE OF CHIRAYU CHARITABLE FOUNDATION (ITANO.179/IND/2019 DATED 09.02.2021 DEALING WITH SIMILAR ISSUE OF CANCELLATION OF REGIS TRATION U/S 12AA OF THE ACT ON THE ALLEGATION OF GENUINENESS OF DONA TION AND THEIR CREDITWORTHINESS. THIS TRIBUNAL AFTER PLACING RELIA NCE ON VARIOUS JUDICIAL PRONOUNCEMENTS HELD THAT REGISTRATION U/S 12AA OF THE ACT CANNOT BE CANCELLED UNLESS IT IS ESTABLISHED BY MATERIAL EVIDENCE THAT THE ACTIVITIES OF SUCH TRUST OR INSTI TUTIONS OR SOCIETY ARE NOT GENUINE OR ARE NOT BEING CARRIED OUT IN ACC ORDANCE WITH SHRI JAIRAM EDUCATION SOCIETY ITA NO.90 & 548/IND/2019 33 OBJECTS OF THE TRUST. THE RELEVANT PORTION OF THIS ORDER IS REPRODUCED BELOW:- 36. WE FURTHER OBSERVE THAT IT HAS BEEN CONSISTENTL Y HELD BY THE HON'BLE COURTS AND CO-ORDINATE BENCHES THAT REGISTR ATION GRANTED TO CHARITABLE SOCIETIES U/S 12AA OF THE ACT CANNOT BE CANCELLED BY INVOKING PROVISIONS OF SECTION 12AA(3) OF THE ACT UNLESS AND UNTIL IT IS ESTABLISHED BY MATERIAL EVIDENCE THAT THE ACTIVITIE S OF SUCH TRUSTS/INSTITUTION ARE NOT GENUINE OR ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUSTS OR THE RE ASONABLE OPPORTUNITY OF BEING HEARD IS NOT GRANTED BEFORE CANCELLING THE REGISTRATION. 37. THE CO-ORDINATE BENCH OF LUCKNOW IN THE CASE OF FATEH CHAND CHARITABLE TRUST V. CIT (EXEMPTIONS) V. CIT (EXEMPT IONS) [2017] 83 TAXMANN.COM 33 (LUCKNOW - TRIB.) HONBLE TRIBUNAL W HILE DEALING WITH THE ISSUE OF CANCELLATION OF REGISTRATION UNDER SE CTION 12AA (III) OF THE I.T ACT HELD THAT: PARA 13. 'HAVING CAREFULLY E XAMINED THE ORDER OF THE ID. COMMISSIONER OF INCOME TAX (EXEMPTIONS) IN THE LIGHT OF THE RIVAL S UBMISSIONS, WE FIND THAT ON RECEIPT OF CERTAIN INFORMATION FROM THE ID. COMMISSIONER OF INCOME TAX (EXEMPTIONS), KOLKATA; I D. COMMISSIONER OF INCOME TAX (EXEMPT IONS) HAS ISSUED NOTICE UNDER SECTION I2AA(3) OF THE ACT TO THE ASSESSEE ON 13.11.2015 FOR COMPLIANCE ON 24.11.2015. ON 24.11.2 015 THE ASSESSEE SOUGHT ADJOURNMENT AND HEARING WAS ADJOURN ED TO 27.11.2015. ON 27.11.2015 THE ASSESSEE HAS FILED A DETAILED REPL Y TO THE CHARGES LEVELED AGAINST IT IN SHOW CAUSE N OTICE. THE ASSESSEE EMPHATICALLY DENIED THE ALLEGATIONS LEVELE D AGAINST THE ASSESSEE THAT IT HAS RECEIVED A DONATION OF RS.L CRORE THROUGH CHEQUE AFTER MAKING PAYMENT OF THE SAME IN CASH TO M/S HERBICURE H EALTH CARE BIO HERBAL RESEARCH FOUNDATION. THE REPLY FILED BY THE ASSESSEE IS AVAILABLE AT PAG ES 19 TO 25 OF THE COMPILATION OF THE ASSESSEE RUNNING INTO 7 PAGE S AND IN PARA 8 OF IT, THE ASSESSEE HAS SPECIFICALLY ASKED T HE ID. COMMISSIONER OF INCOME TAX TH AT IN CASE THERE IS ANY AUTHENTIC MATERIAL AVAILABLE WITH HIM WHICH COULD THROW SOME LIGHT ON THIS ISSUE, THE SAME MAY BE GIVEN TO THE ASSESSEE S O THAT SPECIFIC' REPLY ON THE SAME COULD BE SUBMITTED ON I T, BESIDES DENYING THE ALLEGATIONS LEVELED AGAINST HI M. FOR THE SAKE OF REFERENCE, WE EXTRACT PARA 8 AS UNDER:- 8. THAT YOUR GOODSELF HAS, IN YOUR NOTICE DATED 13/ 11/2015, ALLEGED THAT THE ASSESSEE HAS RECEIVED A DONATION OF RSL,00,00,000/- FROM M/S HERBICURE HEALTH CARE BIO HERBAL RESEARCH FOUNDATION IN THE A/Y 2011- 12 BY PAYING AN AMOUNT OF RS.1,00,00,000/- IN CASH TO M/S HERBICURE HEALTH CARE BIO SHRI JAIRAM EDUCATION SOCIETY ITA NO.90 & 548/IND/2019 34 HERBAL RESEARCH FOUNDATION ITSELF. THIS ALLEGATION IS TOTALLY UNTRUE AS NOTHING OF THIS SORT HAS BEEN WRITTEN OR MENTIONED IN THE CONFIRMATION, GIVEN BY M/S HERBICURE HEALTH CAR E BIO HERBAL RESEARCH FOUNDATION. TILL DATE NO EVIDENCE TO THE CONTRARY HAS BEEN MADE AVAILABLE TO THE ASSESSEE WHICH COULD SUBSTANTIATE YOUR HONOUR'S ALLEGATION THAT THE AMOUNT OFRS.1,00,00,000/- WAS PAID BY THE ASSESSEE IN CASH TO THE DONOR IN EXCHANGE OF DONATION RECEIVED BY CHEQUE. HOWEVER, IN CASE, THERE IS ANY AUTHENTIC MA TERIAL AVAILABLE WITH YOUR HONOUR WHICH COULD THROW SOME L IGHT ON THIS ISSUE, THE SAME MAY BE GIVEN TO THE ASSESS EE SO THAT A SPECIFIC REPLY ON THE SAME COULD BE SUBMITTED ON IT' (II) THE CO- ORDINATE BENCH OF MUMBAI IN THE CASE OF LILAVATI KIRTILAL MEHTA MEDICAL TRUST, BANDRA V. CIT (CENTRA L) I, MUMBAI [2019] 108 TAXMANN.COM 272 (MUMBAI - TRIB.) THE HONBLE ITAT, MUMBAI HELD THAT :- NOW, WE MAY GO BACK TO SECTION 12AA(3) OF THE ACT, WHICH PRESCRIBES ONLY TWO CONDITIONS UNDER WHICH THE COMM ISSIONER IS EMPOWERED TO CANCEL THE REGISTRATION EARLIER GRA NTED U/S. 12A OF THE ACT. IN OUR VIEW, THE POINTS BROUGHT OUT BY THE COMMISSIONER IN THE IMPUGNED ORDER ARE NOT IN THE C ONTEXT OF THE CONDITIONS PRESCRIBED U/S. 12AA(3) OF THE ACT, BUT ARE RELEVANT FOR THE PURPOSES OF MAKING AN ASSESSMENT O F INCOME. 11. IN THE PRESENT CASE, THE CASE SOUGHT TO BE MADE OUT BY THE COMMISSIONE R IS THAT THE VIOLATION CARRIED OUT BY THE ASSESSEE WOULD LEAD TO DENIAL OF EXEMPTION U/S. 11 & 13 OF T HE ACT AND, THEREFORE, THE PRE- REQUISITE OF SECTION 12AA(3) OF THE ACT IS SATISFIED. IN PARA 9 OF THE IMPUGNED ORDER, THE COM MISSIONER RECORDS THAT THE V IOLATION OF SECTION 11 & 13 OF THE ACT WOULD RESULT IN FORFEITURE OF EXEMPTION NOT ONLY FOR THE YEAR IN WHICH SUCH TRANSACTIONS OCCUR BUT ALSO FOR THE YEARS WHEN SUCH ARRANGEMENT CONTINUES TO BE IN FORCE. IN OUR CONSID ERED OPINION, SUCH AN APPROACH OF THE COMMISSIONER IS QUIET MISDIRECTED AND IS INCONSISTENT WITH THE LEGAL POSITION ON THE SUBJ ECT CONTEMPLATED U/S. 12AA(3) OF THE ACT SO AS TO CANCE L REGISTRATION ALREADY GRANTED. WE MAY ADD HERE THAT WE ARE NOT SHUTTING OUT THE CASE OF THE REVENUE TO EXAMINE WHETHER OR NOT THERE HAS BEEN A VIOLATION OF SECTION 13 OF THE ACT , BUT WE ARE ONLY TRYING TO SAY THAT THE SAME IS NOT RELEVANT FO R THE PURPOSE OF CANCELLATION OF REGISTRATION U/S. 12AA(3) OF THE ACT. OF COURSE, SUCH MATTERS CAN BE DEALT WITH IN THE COURSE OF ASSESSMENT PROCEEDINGS AND, IN OUR VIEW, THE SAME OUGHT TO BE DEALT WITH, IF THE SITUATION SO WARRANTS. PRESENTLY, WE ARE CON FINING OURSELVES WITH EXAMINING THE EFFICACY OR OTHERWISE OF THE ACTION OF THE COMMISSIONER IN INVOKING SECTION 12AA(3) OF THE ACT AND SHRI JAIRAM EDUCATION SOCIETY ITA NO.90 & 548/IND/2019 35 WE FIND THAT THE REASONS ADVANCED BY THE COMMISSION ER ARE NOT GERMANE. ON THIS POINT, THE LEARNED REPRESENTATIVE FOR THE ASSESSEE HAS RELIED ON THE FOLLOWING DECISIONS TO S AY THAT SECTION 12AA(3) CANNOT BE INVOKED BY COMMISSIONER F OR CANCELLATION O F REGISTRATION MERELY FOR VIOLATION OF PROVISIONS O F SECTION 11 AND 13 OF THE ACT BY THE ASSESSEE : CIT V. APEEJAY EDUCATION SOCIETY [2015] 59 TAXMANN.COM 102 (PUNJ. & HAR.) CANCER AID & RESEARCH FOUNDATION V. DIT (EXEMPTION) 86/49 TAXMANN.COM 537 (MUM. - TRIB.) CIT (EXEMPTIONS) V. CANCER AID & RESEARCH FOUNDATION INCOME TAX APPEAL NO.505 OF 2015 PRABODHAN SHIKSHAN PRASARAK SANSTHA V. DY. CIT TAXMANN.COM 33/[2015] 152 ITD 473 (PUNE - TRIB.) TAMIL NADU CRICKET ASSOCIATION V. DIT (EXEMPTION) 633/221 TAXMAN 275/[2013] 40 TAXMANN.COM 250 (MAD.) 12. THEREFORE, IN VIEW OF OUR AFORESAID DISCUSSION, ON THE PRELIMINARY POINT ITSELF, WE FIND THAT THE IMPUGNED ORDER OF THE COMMISSIONER CANCELLING THE REGISTRATION U/S. 12AA( 3) OF THE ACT IS BEREFT OF A VALID JURISDICTION. (III)THE HONBLE KARNATAKA HIGH CO URT IN THE CASE OF CIT VS. ISLAMIC ACADEMIC OF EDUCATION REPORTED IN 229 TAXM AN 274 (KARN) HELD AS UNDER :- IN THE INSTANT CASE, THE MATERIAL ON RECORD SHOWS T HAT THE TRUST HAS ESTABLISHED EDUCATIONAL INSTITUTION AND I MPARTING MEDICAL EDUCATION. EVERY YEA R, STUDENTS ARE ADMITTED. HUGE INVESTMENT IS MADE FOR CONSTRUCTION OF BUILDINGS FO R HOUSING THE COLLEGE, HOSTEL AND TO PROVIDE OTHER FACILITIES TO THE STUDENTS WHO ARE STUDYING IN THE COLLEGE. THE COLLE GE IS RECOGNIZED BY THE MEDICAL COUNCIL OF INDIA, STAT E OF KARNATAKA AND ALL OTHER STATUTORY AUTHORITIES. THER EFORE, IT CANNOT BE SAID THAT THE TRUST IS NOT GENUINE. ADMIT TEDLY, THE STUDENTS ARE BEING ADMITTED EVERY YEAR. STUDENTS AR E STUDYING IN ALL COURSES. THUS THE OBJECT OF THE CON STITUTION OF THE TRUST N AMELY IMPARTING OF EDUCATION IS GOING ON UNINTERRUPTEDLY. THEREFORE, IT CANNOT BE SAID THAT THE ACTIVITIES OF THE TRUST ARE NOT BEING CARRIED OUT I N ACCORDANCE WITH THE OBJECTS OF THE TRUST. WHEN THE AFORESAID T WO CONDITIONS ARE FULLY SATISFIED, ON THE GRO UND THAT THE TRUSTEES ARE MISAPPROPRIATING THE FUNDS OF THE TRUS T THE SHRI JAIRAM EDUCATION SOCIETY ITA NO.90 & 548/IND/2019 36 REGISTRATION OF THE TRUST CANNOT BE CANCELLED. IF T HE TRUSTEES ARE MISAPPROPRIATING THE FUNDS, IF THEY ARE MAINTAI NING FALSE ACCOUNTS, IT IS OPEN TO THE AUTHORITIES TO DE NY THE BENEFIT U NDER SECTION 11 OF THE INCOME TAX ACT, BUT THAT IS NOT A GROUND FOR CANCELATION OF REGISTRATION ITSELF . THAT IS PRECISELY WHAT THE TRIBUNAL HAS HELD. THEREFORE, TH E SUBSTANTIAL QUESTION OF LAW IS ANSWERED IN FAVOUR O F THE ASSESSEE AND AGAINST THE REVENUE. THERE IS NO MERIT IN THIS APPEAL. (IV)THE HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF RED ROSE SCHOOL REPORTED IN (2007) 163 TAXMAN 19 (ALL.), WHE REIN IT IS OBSERVED THAT: - 'CIT IS ENTITLED TO SEE ONLY THE GENUINENESS OF OBJ ECTS AND ACTIVITIES : IT HAS BEEN HELD THAT WHILE REFUSING APPLICATION UNDER SECTION 12A THE COMMISSIONER HAS TO EXAMINE O NLY TWO ASPECTS, I.E., GENUINENESS OF THE ACTIVITIES OF THE TRUST / INSTITUTION AND OBJECT OF THE TRUST / INSTITUTION. ONCE THERE IS NO DISPUTE ABOUT THE G ENUINENESS OF THE ACTIVITIES; THE COMMISSIONER CANNOT TAKE SHELTER OF ANY OTHER OUTER SOURCE FOR REFUSING REGISTRATION UNDER SECTION 12A. THE IS SUE OF REGISTRATION UNDER SECTION 12A AND THE SCOPE OF ENQ UIRY AT THE STAGE OF SECTION 12AA WAS DISCUSSED, IT WA S CATEGORICALLY HELD IN THE SAID DECISION THAT SECTIO N 12AA DOES NOT SPEAK ANYWHERE THAT THE CIT, WHILE CONSIDE RING THE APPLICATION FOR REGISTRATION, SHALL ALSO SEE TH AT THE INCOME DERIVED BY THE TRUST OR THE INSTITUTION IS E ITHER NOT BEING SPENT FOR CHARI TABLE PURPOSE OR SUCH INSTITUTION IS EARNING PROFIT. PROFIT EARNING OR MISUSE OF THE INC OME DERIVED BY CHARITABLE INSTITUTION FROM ITS CHARITABLE ACTIV ITIES MAY BE A GROUND FOR REFUSING EXEMPTION ONLY WITH RESPECT T O THAT PART OF THE INCOME BUT CANNOT BE T AKEN TO BE A SYNONYM TO THE GENUINENESS OF THE ACTIVITIES OF THE TRUST OR T HE INSTITUTION. WHILE CONSIDERING THE REGISTRATION UND ER SECTION 12AA, THE SCOPE OF ENQUIRY OF THE COMMISSIONER WOUL D BE LIMITED TO THE AFORESAID EXTENT ONLY.' (V)THE DECISION OF KRUPANIDHI EDUCATIONAL TRUST VS . DIT (E) 152 TTJ 673, WHEREIN IT IS HELD AS UNDER :- THE DIT(E) IN THE ORDER U/S 12AA(3) OF THE ACT, DO NOT MAKE OUT ANY CASE, WHICH CAN SHOW THE ACTIVITIES OF THE ASSESSEE ARE NOT GENUINE OR THAT THE ACTIVITIES OF THE ASS ESSEE ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST OR INSTITUTION. THE FACT THAT THE ASSESSEE WAS PAYI NG COMMISSION TO PERSONS WHO SOLICIT STUDENTS FOR STUD YING IN THE ASSESSEES INSTITUTION CANNOT LEAD TO THE CONCL USION THAT THE A SSESSEE IS NOT IMPARTING EDUCATION. SIMILARLY PURCH ASE OF A BMW CAR, BORROWING OF LOANS FROM SINDHI FINANC IERS, SHRI JAIRAM EDUCATION SOCIETY ITA NO.90 & 548/IND/2019 37 NON MAINTENANCE OF REGULAR BOOKS OF ACCOUNTS, VIOLA TIONS OF PROVISIONS OF SEC.13(1)( C) OF THE ACT IN AS MUCH A S THE TRUSTEES WERE PAID ENORMOUS SALARY ARE ALL BY WAY OF PASSING REFERENCE HAVING NORELEVANCE TO WHETHER OR NOT THE ASSESSEE WAS PURSUING EDUCATION AS ITS MAIN OBJECT. THERE ARE NO FACTS BROUGHT OUT IN THE IMPUGNED ORDER REGA RDING THE GENUINENESS OF THE ACTIVITIES OF THE TRUST OR A S TO WHETHER THE OBJECT OF EDUCATION WAS NOT PURSUED BY THE ASSE SSEE AS ITS MAIN AND PREDOMINANT ACTIVITY. IN FACT, THE ORD ER OF THE DIT(E) DOES NOT ANYWHERE SHOW THAT THE ASSESSEE IS NOT IMPARTING EDUCATION. THE COMPLAINT OF THE REVENUE S EEMS TO BE THAT EDUCAT ION IS BEING IMPARTED BUT ON COMMERCIAL LINES. THE DEFINITION OF CHARITABLE PURPOSE IS GIVEN IN SE C.2(15) OF THE ACT. THE SAME REFERS TO 'RELIEF TO POOR, MEDICA L RELIEF, EDUCATION AND THE ADVANCEMENT OF ANY OTHER OBJECT O F GENERAL PUBLIC UTILITY'. THE PROV ISO TO SEC.2(15) OF THE ACT INTRODUCED BY THE FINANCE ACT, 2008 W.E.F. 1.4.2008 REGARDING EXCLUDING ORGANIZATIONS WHERE THERE IS PR OFIT MOTIVE FROM THE DEFINITION OF CHARITABLE PURPOSE AP PLIES ONLY TO THE CATEGORY OF TRUSTS WHICH HAS AS ITS OBJECT, THE OBJ ECT OF 'ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY'. IT DOES NOT APPLY TO THE OTHER CATEGORIES OF CHARITABL E PURPOSE VIZ., 'RELIEF TO POOR, EDUCATION AND MEDICAL RELIEF '. AS RIGHTLY POINTED OUT BY THE LEARNED COUNSEL FOR THE ASSESSEE , ELEEMO SYNARY ELEMENT IS NOT ESSENTIAL ELEMENT OF CHARITY. IT IS ALSO NOT A NECESSARY ELEMENT IN A CHARITABLE PUR POSE THAT IT SHOULD PROVIDE SOMETHING FOR NOTHING OR FOR LESS THAN IT COSTS OR FOR LESS THAN THE ORDINARY PRICE. THE SURP LUS GENERATED, IF IT IS HELD FOR CHARITABLE PURPOSE AND APPLIED FOR CHARITABLE PURPOSE OF THE ASSESSE, AND THEN THE ASS ESSEE HAS TO BE CONSIDERED AS EXISTING FOR A CHARITABLE P URPOSE. THERE ARE ENOUGH SAFEGUARDS PROVIDED IN SEC.12 AND 13 OF THE ACT TO ENSURE THAT PERSONAL BENEFITS OF THEPERSONS IN CONTROL OF THE TRUSTS ARE NOT TREATED AS HAVING APP LIED FOR CHARITABLE PURPOSE AND FOR BEING BROUGHT TO TAX LIK E PROVISIONS OF SEC.13(1) (C ) OF THE ACT WHICH RESTR ICTS UNREASONABLE AND EXCESSIVE PAYMENTS TO CERTAIN CATE GORY OF PERSONS CONNEC TED WITH A TRUST OR OTHER INSTITUTION. IN SUCH CIRCUMSTANCES, THE ORDER U/S 12AA(3) OF THE ACT, CA NNOT BE SUSTAINED. (VI)THE DECISION OF PRABODHAN PRASARAK SHIKSHAN SAN THAN VS. DCIT152 ITD 473 (PUNE), WHEREIN IT IS HELD AS UNDE R :- THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF SINHAGAD TECHNICAL EDUCATION SOCIETY V. CIT (CENTRAL) 2012) 343 ITR 23 (BOM) HAS HELD THAT 'EVERY STATUTORY PROVISION W HICH OPERATES IN RESPECT OF A TRUST, WHICH HAS ALREADY B EEN REGISTERED IN THE PAST IS NOT NECESSARILY RETROSPEC TIVE . A SHRI JAIRAM EDUCATION SOCIETY ITA NO.90 & 548/IND/2019 38 PROVISION IS RETROSPECTIVE WHEN IT TAKES AWAY A RIG HT WHICH HAS VESTED OR ACCRUED IN THE PAST. THE EFFECT OF TH E PROVISION IS TO EMPOWER THE COMMISSIONER TO CANCEL THE REGIST RATION OF THE TRUST WHERE HE IS SATISFIED THAT THE ACTIVITIES OF THE TRUST ARE NOT GENUINE OR ARE NOT BEING CARRIED OUT IN ACCORDA NCE WITH THE OBJECTS OF THE TRUST OR INSTITUTION. THIS COULD NOT BY ANY STRETCH OF IMAGINATION BE REGARDED AS RETROSPEC TIVE ALTERNATION OF THE LAW. IN THE CASE BEFORE US, AS P ER THE AMENDMENT BY THE FINAN CE ACT, 2010, THE COMMISSIONER HAS CLAIMED TO BE EMPOWERED TO INITIATE STEPS FOR T HE CANCELLATION OF THE REGISTRATION OF A TRUST OR INST ITUTION WHERE THE ACTIVITIES OF THE TRUST OR INSTITUTION ARE NOT GENUINE OR ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS THEREOF EVEN IN RELATION TO A TRUST WHICH WAS REGISTERED UN DER S. 12A AS IT THEN STOOD.' SO BASIC REQUIREMENT FOR INV OKING S. 12AA(3) IS THAT THE ACTIVITIES OF THE TRUST ARE NOT GENUINE AND ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OB JE CTS OF THE TRUST. THE CIT HAS RECORDED HER FINDINGS IN THE ORDER U/S 12AA(3) THAT THE TRUST IS IMPARTING KNOWLEDGE AT CO ST AND THEREFORE, NOT A CHARITABLE TRUST WITHIN THE PURVIE W OF S. 2(15) OF THE ACT, SECONDLY, THE APPELLANT TRUST HAS CONTRAVENED THE PR OVISIONS OF SS. 11(5) AND 13(1) (C) OF THE ACT. THIRDLY, THE TRUST IS TREATED BY THE CHAIRMAN AND FAMILY MEMBERS /RELATIVES AS THEIR PRIVATE PROPERTY AND EN JOYED BY THEM FOR THEIR BENEFITS ONLY. THERE IS NOTHING ON R ECORD TO SUGGEST THAT THE TRUST IS NOT ' GENUINE'. IN FACT, THE TRUST IS CARRYING ON EDUCATIONAL ACTIVITIES THEY ARE CHARITA BLE IN NATURE. THE ACTIVITIES ARE CARRIED OUT AS PER ITS O BJECTS. THERE IS NO INFRINGEMENT OF ANY OF THE PROVISIONS C ONTAINED IN SS.1 1(5) AND 13 OF THE ACT. THE PROVISIONS OF S.12AA(3) FOR CANCELLATION/WITHDRAWAL OF REGISTRATION GRANTED TO IT W.E.F. 11-2- 1998 U/S 12A OF THE ACT ARE NOT RETROSPECTIVE AND THEREFORE, THE IMPUGNED ORDER OF THE CIT PASSED U/S 12AA(3) IS NOTHING BUT A REVIEW OF ITS EARLIER ORDE R WHICH IS IMPERMISSIBLE IN LAW. (VII)THE DECISION OF RAJASTHAN VIKAS SANSTHAN VS. CIT REPORTED IN 78 DTR 411 (RAJ), WHEREIN IT IS HELD A S UNDER :- THE REGISTRATION CAN BE CANCELLED ON THE GROUND THA T THE ACTIVITY OF THE TRUST ARE NOT GENUINE OR ARE NOT BE ING CARRIED OUT IN ACCORDANCE WITH THE OBJECT OF THE TRUST. IN CASE THERE ARE VIOLATIONS AS MENTIONED IN S. 11 AND 13 OF THE ACT. THUS THE AO WHILE MAKING ASSESSMENT CAN DENY THE EXEMPTI ON TO THE TRUST. FOR GETTING THE EXEMPTION U/S 11, REGIST RATION IS PRE-REQUISITE. HOW EVER, REGISTRATION IS NOT A GUARANTEE FOR EXEMPTION. IN CASE THE TRUST FAILS TO COMPLY WITH T HE REQUIREMENTS AS MENTIONED IN S. 11 AND 13 OF THE AC T THEN SHRI JAIRAM EDUCATION SOCIETY ITA NO.90 & 548/IND/2019 39 EXEMPTION CAN BE DENIED. IN RESPECT OF FAILURE MENT IONED IN S. 11 AND 13 IN A PARTICULAR YEAR, IT CANN OT BE SAID THAT REGISTRATION IS TO BE CANCELLED. SURPLUS IN EDUCATI ONAL ACTIVITIES IS NOT RELEVANT FOR CANCELLING THE REGIS TRATION. THE EDUCATION ITSELF IS CHARITABLE OBJECT AND IF THE SU RPLUS IS UTILIZED FOR THE PURPOSE OF CHARITABLE ACTIVITIES T HEN IT CA NNOT BE SAID THAT REGISTRATION IS TO BE DISALLOWED. THE GROUND ON WHICH THE REGISTRATION CANNOT BE REFUSED, CANNOT BE CONSIDERED AS A GROUND FOR CANCELLING THE REGISTRAT ION. (VIII) THE CO-ORDINATE BENCH OF COCHIN IN THE CASE OF M/S KUNHITHARUVAI MEMORIAL CHARITABLE TRUST, KMCT CORPO RATE OFFICE, MALABUR CHRISTIAN COLLEGE CROSS ROAD, CALICUT V CIT (CENTRAL), KOCHI (ORDER DATED 16/01/2017 IN APPEAL NO. 246/COCH/14) IT WAS HELD THAT :- PARA 16. HAVING SAID SO, LET US EXAMINE THE POWERS OF THE COMMISSIONER TO GRANT REGISTRATION U/S 12AA AND CAN CELLATION OF REGISTRATION U/S 12AA (3) OF THE ACT. THE POWER TO CANCEL REGISTRATION ALREADY GRANTED U/S.12AA OF THE ACT IS CONTAINED IN SEC. 12AA(3) OF THE ACT AND IT READS AS FOLLOWS: '(3) WHERE A TRUST OR AN INSTITUTION HAS BEEN GRANT ED REGISTRATION UNDER CLAUSE (B) OF SUB-SECTION (1) AND SUBSEQUENTLY THE COMMISSIONER IS SATISFIED THAT THE ACTIVITIES OF SUCH TRUST OR INST ITUTION ARE NOT GENUINE OR ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST OR INSTITUTION, AS THE CASE MAY BE, HE SHALL PASS A N ORDER IN WRITING CANCELLING THE REGISTRATION OF SUCH TRUST OR INSTIT UTION. PROVIDED THAT NO ORDER UNDER THIS SUB-SECTION SHALL BE PASSED UNLESS SUCH TRUST OR INSTITUTION HAS BEEN GIVEN A REASONAB LE OPPORTUNITY OF BEING HEARD.' THE PROVISIONS OF SECTION 12AA OF THE ACT, DEALS WI TH PROCEDURE FOR REGISTRATION OF TRUST/INSTITUTIONS. AS PER SAID S ECTION, THE COMMISSIONER SHALL LOOK INTO THE OBJECTS OF THE TRU ST AND ITS ACTIVITIES AND SATISFY HIMSELF ABOUT THAT THE OBJECTS OF THE T RUST ARE CHARITABLE IN NATURE AND ITS ACTIVITIES ARE GENUINE AND SUCH ACTI VITIES ARE CARRIED OUT IN ACCORDANCE WITH ITS OBJECTS. SUB-SECTION (3) INS ERTED WITH EFFECT FROM 1ST OCT., 2004 EMPOWERS THE COMMISSIONER TO CANCEL THE REGISTRATION OF A TRUST OR INSTITUTION GRANTED UNDER CLAUSE (B) OF SUB-SECTION (1) WHEN SUBSEQUENT TO GRANT OF REGISTRATION THE COMMISSIONE R IS SATISFIED THAT ACTIVITIES OF TRUST OR INSTITUTION ARE NOT GENUINE OR ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH OBJECTS OF THE TRUST OR INST ITUTION.BASIC PURPOSE OF S. 12AA(3) IS TO CHECK MISUSE OF EXEMPTION UNDER PRETEXT OF CARRYING OUT CHARITABLE ACTIVITIES WHEN THE SAME ARE NOT SO. THE CIT HAS TO MAKE OUT CLEAR CASE FOR EXERCISING POWERS U/S. 12AA (3). IN THIS CASE, SO FAR AS OBJECT OF TRUST IS CONCERNED, IT IS NOWHE RE DISPUTED THAT ASSESSEE IS ENGAGED IN IMPARTING EDUCATION. ONCE AN INSTITUTION CAME SHRI JAIRAM EDUCATION SOCIETY ITA NO.90 & 548/IND/2019 40 WITHIN THE PHRASE 'EXISTS SOLELY FOR EDUCATIONAL PU RPOSE AND NOT FOR PROFIT' NO OTHER CONDITION LIKE APPLICATION OF INCO ME WAS REQUIRED TO BE COMPLIED WITH. THE MERE EXISTENCE OF PROFIT/SURPLUS DID NOT DISQUALIFY THE INSTITUTION. BREACH OF THE CONDITIONS OF THE TR UST DEED WOULD NOT DISENTITLE THE INSTITUTION FROM GETTING THE BENEFIT WHICH THE INSTITUTION HAD BEEN GRANTED EARLIER BEING A CHARITABLE TRUST. NOWHERE IN HER ORDER, THE CIT HAS TAKEN ANY OBJECTION TO THE CHARI TABLE AND EDUCATIONAL NATURE OF THE INSTITUTION. IN FACT, THE OBJECTS OF THE INSTITUTION AS DECLARED IN THE TRUST DEED DO REFLEC T THAT ALL ARE PHILANTHROPIC OR BENEVOLENT IN NATURE, PRECISELY, F OR THE PURPOSE OF IMPARTING EDUCATION. STRANGE ENOUGH, THERE IS NO FI NDING RECORDED BY THE CIT CONTRARY TO THIS FACT.RATHER, THIS IS ALSO NOT THE CASE OF THE CIT THAT THE INSTITUTION IS DOING SOME OTHER ACTIVITY O F EARNING PROFIT OTHER THAN THE ACTIVITY OF RUNNING EDUCATIONAL INSTITUTIO NS. THE ESTABLISHED FACTUAL POSITION IS THAT THE INSTITUTION IS NOT DOI NG ANY OTHER ACTIVITY EXCEPT RUNNING EDUCATIONAL INSTITUTIONS. IN SUCH CI RCUMSTANCES, THE ACTION OF CANCELLATION OF REGISTRATION CANNOT BE UP HELD. AS FAR AS THE OBJECT OF THE ASSESSEE IS CONCERNED, THIS IS NOT TH E CASE OF THE REVENUE THAT THE ASSESSEE WAS NOT IMPARTING EDUCATION. SINC E THE QUESTION ABOUT THE IMPARTING OF EDUCATION HAS NOT BEEN DOUBT ED OR CHALLENGED BY THE REVENUE, THE IMPUGNED ORDER PASSED BY THE CI T IS UNSUSTAINABLE IN LAW. STRANGE ENOUGH AGAIN, THERE I S NOTHING ON RECORD TO PROVE EVEN SIGHTLESSLY THAT THE PURPOSE OF IMPAR TING EDUCATION WAS NOT FULFILLED BY THIS INSTITUTE, THUS THE REVENUE D EPARTMENT HAS FAILED TO ESTABLISH THAT THERE WAS ANY ILLEGAL ACTIVITY OR INFRINGEMENT OF LAW SO AS TO DOUBT THE GENUINENESS OF THE ACTIVITIES. 38. ON PERUSAL OF THE JUDGMENTS AND DECISIONS REFER RED HEREIN ABOVE, WE FIND THAT THEY ARE SQUARELY APPLICABLE ON THE FA CTS OF THE INSTANT APPEAL AND THE ISSUE RAISED BEFORE US AND THUS FAVO URS THE ASSESSEE. BEFORE CONCLUDING WE WOULD LIKE TO SUMMARISE OUR FI NDINGS AND OBSERVATIONS IN FOLLOWING MANNER:- (I) AS REGARDS THE ALLEGED DONATIONS RECEIVED FROM VARIOUS CONCERNS MENTIONED IN THE IMPUGNED ORDER, WE ARE SATISFIED WITH THE IDENTITY OF THE ALLEGED DONORS, GENUINENESS OF THE TRANSACTION OF GIVING DONATIIO N TO THE ASSESSEE TRUST SINCE MOST OF THE ALLEGED DONORS A RE EITHER CHARITABLE TRUSTS OR KNOWN TO THE DIRECTORS / PROMOTERS AND THE TRANSACTIONS BEING CARRIED OUT THROUGH BANKING CHANNEL AND WE ARE ALSO SATISFIED WITH THE CREDITWORTHINESS OF THE ALLEGED DONORS AS THEY HAV E SUFFICIENT FINANCIAL STRENGTH TO PROVIDE THE DONAT ION TO THE ASSESSEE TRUST, (II) AS REGARDS THE ALLEGED IRREGULARITY IN EDUCATI ON PROCESS NOTED BY CBI THE MATTER IS STILL SUBJUDICE WITH TH E COURT AND THE ORDER OF REGULATORY AUTHORITY NAMELY ADMISSION FEE REGULATORY COMMITTEE STAND STAYED BY THE HON'BLE JURISDICTIONAL HIGH COURT VIDE STAY ORDER DATED 23 .7.2015 WHICH IS EFFECTIVE TILL DATE. THE ALLEGED IRREGULA RITY IS FOR ONE SHRI JAIRAM EDUCATION SOCIETY ITA NO.90 & 548/IND/2019 41 OF THE YEAR IN ONLY ONE OF THE COLLEGE RUN BY THE TRUST AMONGST OTHER HOSPITALS AND COLLEGES WHICH ARE UNDISPUTED LY PROVIDING CHARITABLE SERVICES IN THE FIELD OF MEDI CAL AND EDUCATION. (III) THE ISSUE OF IRREGULARITY IN ADMISSION PROCES S IS NOT PART OF THE SHOW CAUSE NOTICE DATED 6.12.2018 ISSUED TO THE ASSESSEE IN CONNECTION WITH THE CANCELLATION OF REGISTRATION U/ S 12AA(3) OF THE ACT WHICH SHOWS THAT ASSESSEE WAS NOT GRANTED REASO NABLE OPPORTUNITY OF BEING HEARD ON THIS ISSUE WHICH IN I TSELF MAKES THE PROCEEDINGS BAD IN LAW. (IV) THE ISSUES RAISED IN THE SHOW CAUSE NOTICE DAT ED 6.12.2018 ISSUED BY LD. PCIT ARE NOT RELEVANT FOR CANCELLATION OF REGISTRATION U/S 12AA(3) OF THE AC T. SUCH TYPES OF ISSUES CAN BE EXAMINED BY THE ASSESSING O FFICER DURING THE COURSE OF REGULAR ASSESSMENT PROCEEDING S WHEREIN ON THE BASIS OF HIS EXAMINATION/ INVESTIG ATION NECESSARY VIEW AS PERMISSIBLE IN LAW CAN BE TAKEN IF VIOLATION OF SECTION 11 AND SECTION 13 OF THE ACT BY THE ASSESSEE ARE OBSERVED. LD. PCIT CAN ONLY CANCEL T HE REGISTRATION U/S 12AA(3) OF THE ACT IF IT IS FOUND THAT THE ACTIVITIES OF THE SOCIETY/TRUST ARE EITHER NOT GENU INE OR ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH ITS OBJECT PR OVIDED IN BYE LAWS. (V) WE ALSO FIND THAT NOTHING ON RECORD HAS BEEN BR OUGHT BEFORE US BY WAY OF AN INDEPENDENT ENQUIRY BY LD. PCIT THEREB Y COLLECTING NECESSARY EVIDENCE WHICH CAN SHOW THAT THE ACTIVITI ES OF THE ASSESSEE SOCIETY ARE EITHER NOT GENUINE OR ARE NOT BEING CARRIED OUT AS PER THE OBJECTS OF THE SOCIETY WHICH WERE FI LED BEFORE THE REGISTERING AUTHORITY AT THE TIME OF GRANTING REGIS TRATION U/S 12AA OF THE ACT. IT IS THEREFORE ESTABLISHED THAT THE AC TIVITIES CARRIED OUT BY THE APPELLANT ASSESSEE SOCIETY BY WAY OF RUNNING HOSPITALS AND MEDICAL COLLEGES FOR THE BENEFIT OF PUBLIC AT L ARGE AND FOR THE STUDENTS ARE FOR CHARITABLE PURPOSES ONLY AS PROVI DED IN SECTION 2(15) OF THE ACT. 39. WE THEREFORE IN VIEW OF OUR ABOVE FINDING ARRIV ED AT AFTER EXAMINING THE FACTS OF THE INSTANT CASE AND IN THE LIGHT OF JUDGMENTS REFERRED HEREIN ABOVE WHICH ARE SQUARELY APPLICABLE ON THE FACTS AND ISSUE RAISED BEFORE US ARE OF THE CON SIDERED VIEW THAT THE IMPUGNED ORDER OF LD. PCIT CANCELLING THE ASSESSEES REGISTRATION GRANTED U/S 12AA(1) OF THE ACT DESERVE S TO BE QUASHED. WE ACCORDINGLY ORDER SO AND DIRECT THE REV ENUE AUTHORITIES TO RESTORE THE REGISTRATION U/S 12AA(1) OF THE ACT GRANTED TO ASSESSEE SOCIETY W.E.F. 1.4.2011. ACCORD INGLY ALL THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. SHRI JAIRAM EDUCATION SOCIETY ITA NO.90 & 548/IND/2019 42 15C. IT IS ALSO A SETTLED ISSUE THAT THE REGISTRATI ON U/S 12AA CANNOT BE CANCELLED FROM RETROSPECTIVE EFFECT. FOR THIS VIEW WE PLACE RELIANCE ON THE JUDGMENT OF HON'BLE MADRAS HIGH COURT IN THE CASE OF AURO LAB V. ITO (2019) 102 TAXMANN.COM 225 DATED 23.01.2019 WHEREIN HON'BLE COURT HELD THAT SINCE THE ACT OF CANCELLATION OF REGISTRATION HAS SERIOUS CIVIL CONS EQUENCES AND THE AMENDED PROVISION IS HELD TO HAVE ONLY A PROSPECTIV E EFFECT THE EFFECT OF CANCELLATION, IN THE EVENT THE PENDING TA X APPEAL IS DECIDED IN FAVOUR OF THE REVENUE, WILL OPERATE ONLY FROM THE DATE OF THE CANCELLATION ORDER, THAT IS 30.12.2010. IN OTHE R WORDS, THE EXEMPTION CANNOT BE DENIED TO THE PETITIONER FOR AN D UP TO THE ASSESSMENT YEAR 2010-11 ON THE SOLE GROUND OF CANCE LLATION OF THE CERTIFICATE OF REGISTRATION. [EMPHASIS SUPPLIED] 15D. IN VIEW OF THE ABOVE DISCUSSION WITH REGARD TO GROUND NO.1 2 & 6 OF THE ASSESSEES APPEAL, IN LIGHT OF THE JUDGM ENTS AND DECISIONS REFERRED HEREIN ABOVE SETTLED AND JUDICIA L PRINCIPLES, WE ARE OF THE CONSIDERED VIEW THAT FIRSTLY, LD. PR. CI T ERRED IN CANCELLING THE REGISTRATION WITH RETROSPECTIVE EFFE CT FROM 01.04.2008 AND SECONDLY, WE ARE ALSO OF THE VIEW TH AT LD. PR. CIT ERRED IN CANCELLING THE REGISTRATION U/S 12AA(3) AN D 12AA(4) OF THE ACT WITHOUT PLACING ANY MATERIAL EVIDENCES WHIC H COULD SHRI JAIRAM EDUCATION SOCIETY ITA NO.90 & 548/IND/2019 43 INDICATE THAT THE ASSESSEE SOCIETY WAS NOT RUNNING FOR THE CHARITABLE OBJECTS FOR WHICH IT WAS ESTABLISHED AND NOR ANY DOUBT HAS BEEN RAISED ABOUT GENUINENESS OF THE ACTIVITIES CARRIED OUT BY THE ASSESSEE SOCIETY WITH REGARD TO IMPARTING OF ED UCATION AND CARRYING OUT CHARITABLE ACTIVITIES. SO FAR AS, THE ISSUE ARISING OUT OF THE LOOSE PAPERS IS CONCERNED IN THIS CASE ALLEG ING THAT THE FUND OF THE ASSESSEE SOCIETY HAVE BEEN MISAPPROPRIATED B Y THE MEMBERS OF THE SOCIETY OR THERE IS ANY AMBIGUITY IN THE CLAIM OF EXPENSES, IT CAN WELL BE TAKEN CARE OF AT THE TIME OF ASSESSING THE INCOME AND IF NEEDED THE ADDITIONS CAN BE MADE TO T HE INCOME OF THE ASSESSEE AND THE SAME SHOULD BE RESTRICTED ONLY TO THE ISSUE INVOLVED. HOWEVER IN NO CASE THE REMAINING INCOME O F THE TRUST/SOCIETY SHOULD BE AFFECTED BY WAY OF DENYING THE BENEFIT OF EXEMPTION U/S 11 & 12 OF THE ACT. WE ACCORDINGLY AL LOW GROUND NO.1 2 & 6 OF THE ASSESSEES APPEAL. 16. APROPOS TO GROUND NO.5 ASSESSEE HAS RAISED AN I SSUE THAT LD. PR. CIT ERRED IN INVOKING THE PROVISIONS OF SECTION 12AA(4) OF THE ACT AS IT WAS NOT APPLICABLE IN THE CASE OF ASSESSE E BECAUSE SECTION 12AA(4) OF THE ACT WAS INSERTED W.E.F. 01.1 0.2014. WE HOWEVER, FIND THIS GROUND TO BE INFRUCTUOUS IN NAT URE FIRSTLY BECAUSE THE LD. PR. CIT HAS CARRIED OUT THE PROCEED ING U/S SHRI JAIRAM EDUCATION SOCIETY ITA NO.90 & 548/IND/2019 44 12AA(3) OF THE ACT AS WELL AS 12AA(4) OF THE ACT. T HOUGH RIGHTLY CONTENDED THAT AMENDED PROVISION I.E. SECTION 12AA (4) OF THE ACT WERE INSERTED FROM 01.04.2014 BUT IT IN ITSELF CANN OT CHALLENGE THE VALIDITY OF THE IMPUGNED ORDER BECAUSE LD. PR. CIT HAS ALSO INVOKED THE PROVISIONS OF SECTIONS 12AA(3) OF THE A CT. HAD LD. PR. CIT CARRIED OUT THE PROCEEDINGS ONLY U/S 12AA(4) OF THE ACT THE ASSESSEE MAY HAD CASE. HOWEVER, IN THE INSTANT CASE BOTH SUB- SECTION (3) & (4) OF SECTION 12AA OF THE ACT WERE I NVOKED AND LD. PR. CIT(A) WAS WELL WITHIN IN HIS JURISDICTION TO C ARRY OUT THE IMPUGNED PROCEEDINGS. WE ACCORDINGLY DISMISS GROUND NO.5 RAISED BY THE ASSESSEE. 17. APROPOS TO GROUND NO.3 & 4 LD. COUNSEL FOR THE ASSESSEE HAS CONTENDED THAT LD. PR. CIT ERRED IN INVOKING THE PR OVISION OF SECTION 12AA(3) OF THE ACT MERELY ON THE BASIS OF H IS FINDING THAT THE PROVISIONS OF SECTION 13(1)(C)(II) ARE APPLICAB LE ON THE ASSESSEE. WE FIND THAT THE ALLEGED SEIZED DOCUMENTS ONLY PERT AINS TO FINANCIAL YEAR 2009-10 I.E. A.Y. 2010-11 AND NOT FO R ANY OTHER YEAR. NOTHING ADVERSE HAS BEEN OBSERVED BY LD. PR. CIT(CENTRAL) FROM THE DATE OF REGISTRATION U/S 12AA OF THE ACT I .E. 01.04.2008 TILL THE DATE OF PASSING IMPUGNED ORDER EXCEPT FOR A.Y. 2010-11. IT IS JUDICIALLY SETTLED THAT IF PROVISIONS OF SECTION 13(1)(C) OF THE ACT SHRI JAIRAM EDUCATION SOCIETY ITA NO.90 & 548/IND/2019 45 ARE ATTRACTED, THE BENEFITS OF EXEMPTION UNDER SECT ION 11 & 12 OF THE ACT ARE NOT AVAILABLE TO THE ASSESSEE, IT IS SU BJECT MATTER OF THE ASSESSMENT PROCEEDINGS AS TO WHETHER THE EXEMPT ION U/S 11 & 12 OF THE ACT IS TO BE DENIED OR FORFEITED TO THE EXTENT OF VIOLATION OF PROVISION OF SECTION 13(1)(C) OF THE A CT IS FORMED BY THE LD. AO BUT IT CAN IN NO WAY LEAD TO CANCELLATION OF REGISTRATION GRANTED U/S 12AA OF THE ACT UNLESS ANY COGENT AND P OSITIVE MATERIAL IS BROUGHT ON RECORD TO ESTABLISH THAT THE SOCIETY IS NOT CARRYING OUT GENUINE CHARITABLE ACTIVITIES AS PER T HE OBJECTS FOR WHICH IT HAS ESTABLISHED. IF THE PROVISIONS OF SECT ION 13 ARE VIOLATED, IT EMPOWERS THE ASSESSING OFFICER TO FORF EIT THE EXEMPTION PERMISSIBLE U/S 11 & 12 OF THE ACT ONLY TO THE EXTE NT OF AMOUNT NOT ALLOWED U/S 11 & 12 OF THE ACT. HOWEVER, SUCH V IOLATION CANNOT FORM A GROUND FOR CANCELLATION OF REGISTRATI ON U/S 12AA(3) OF THE ACT. RELIANCE PLACED ON THE DECISION OF COOR DINATE BENCH, MUMBAI IN THE CASE OF LILAVATI KIRTILAL MEHTA MEDICAL TRUST (2019) 108 TAXMANN.COM 272 DATED 12.06.2019. 17A. WE THEREFORE, RESPECTFULLY FOLLOWING THE SAME, ARE OF THE CONSIDERED VIEW THAT THE VIOLATION OF U/S 13 OF THE ACT CANNOT BE THE BASIS FOR CANCELLATION OF REGISTRATION 12AA OF THE ACT. ON THIS LEGAL GROUND ITSELF THE IMPUGNED ORDER CANCELLING R EGISTRATION SHRI JAIRAM EDUCATION SOCIETY ITA NO.90 & 548/IND/2019 46 12AA OF THE ACT DESERVES TO BE QUASHED. ACCORDINGLY GROUND NO.3 & 4 OF THE ASSESSEES APPEAL ARE ALLOWED. 17B. APROPOS TO GROUND NO.7 PERTAINING TO ALLEGED B OGUS SALARY EXPENSES AND MISAPPROPRIATION OF FUNDS BY THE TRUST SOCIETY, THE SAME WILL BE DEALT WHILE DEALING WITH THE ASSESEES APPEAL IN ITANO.548/IND/2019 WHEREIN THE ASSESSEE HAS CHALLEN GED THE FINDING OF LD. CIT(A) CONFIRMING THE ACTION OF THE LD. AO OF MAKING CERTAIN ADDITIONS BASED ON THE LOOSE PAPERS AND TRE ATING THE ASSESSEE AS CARRYING OUT BUSINESS AND NOT CARRYING OUT CHARITABLE ACTIVITIES. SO FAR AS THE INSTANT APPEAL IS CONCERN ED THIS GROUND BECOMES INFRUCTUOUS. IN VIEW OF THE FACT THAT WE HA VE ALREADY QUASHED THE IMPUGNED ORDER SINCE THE LD. PR. CIT HA S INVOKED THE PROVISIONS OF SECTION 12AA(3) & 12AA(4) OF THE ACT ONLY ON THE BASIS OF INVOKING PROVISIONS OF SECTION 13(1)(C)(II ) OF THE ACT FOR CANCELLING THE REGISTRATION U/S 12AA OF THE ACT WHI CH IN OUR VIEW WAS NOT CORRECT SINCE ONLY THE AMOUNT OF BENEFIT OF EXEMPTION CAN BE A SUBJECT MATTER BUT CONTINUING OF REGISTRATION U/S 12AA OF THE ACT CANNOT BE CHALLENGED. ACCORDINGLY GROUND NO.7 IS DISMISSED AS INFRUCTUOUS. 18. AS A RESULT, THIS APPEAL ITANO.90/IND/2019 IS P ARTLY ALLOWED. SHRI JAIRAM EDUCATION SOCIETY ITA NO.90 & 548/IND/2019 47 NOW WE TAKE UP ITANO.548/IND/2019 19. AT THE COST OF REPETITION THE BRIEF FACTS ARE T HAT SUBSEQUENT TO SEARCH U/S 132 OF THE ACT ON 30 TH AUGUST 2016 AT RAMANI GROUP WHEREIN LOOSE PAPERS PERTAINING TO ASSESSEE WERE FO UND AND SEIZED AND THE SAME WERE CONFRONTED TO THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOR A.Y. 2010-11 A ND LD. AO BEING NOT SATISFIED WITH THE SUBMISSIONS OF ASSESSE E COMPLETED THE ASSESSMENT TREATING THE ASSESSEE AS RUNNING BUS INESS AND NOT FOR CARRIED OUT CHARITABLE ACTIVITY, TREATED TH E NET INCOME OVER EXPENDITURE OF RS.1,96,50,937/- AS BUSINESS INCOME, DISALLOWED BOGUS SALARY EXPENSES AT RS.20,48,173/-, MADE ADDIT ION FOR UNEXPLAINED MONEY ON ACCOUNT OF BUSINESS RECEIPTS A T RS.69,70,505/- AND ALSO DENIED THE DEDUCTION FOR CA PITAL EXPENDITURE CLAIMED BY THE ASSESSEE HAVING BEEN APP LIED FOR CHARITABLE PURPOSES. INCOME ASSESSED AT RS.2,86,69, 615/-. ASSESSEE CHALLENGED ALL THE FINDING OF THE LD. AO B EFORE THE LD. CIT(A) AND PARTLY SUCCEEDED. LD. CIT(A) HELD THAT P ROCEEDINGS U/S 148 OF THE ACT ARE VALID LD. CIT(A) ALSO HELD THAT IN VIEW OF THE SEIZED LOOSE PAPERS AND THE FINDING OF THE LD. AO T HE ASSESSEE SOCIETY IS NOT RUNNING FOR CHARITABLE PURPOSE AND T HEREFORE, NOT ENTITLED FOR CLAIMING DEDUCTION U/S 11 & 12 OF THE ACT. LD. CIT(A) SHRI JAIRAM EDUCATION SOCIETY ITA NO.90 & 548/IND/2019 48 ALLOWED CLAIM OF EXPENDITURE OF AT RS.3,52,94,416/- DENIED BY THE LD. AO AND HELD THAT THE REAL INCOME OF THE ASSESSE E IS LOSS AT RS.1,56,43,479/- AS AGAINST THE INCOME OF RS.1,96,5 0,937/- CONSIDERED BY THE LD. AO. LD. CIT(A) ALSO CONFIRMED THE ADDITION FOR BOGUS SALARY EXPENDITURE OF RS. 20,48,173/-. HO WEVER, LD. CIT(A) GRANTED PARTIAL RELIEF WITH REGARD TO ADDITI ON OF RS.69,70,505/- MADE BY THE LD. AO ON ACCOUNT OF SUP PRESSION OF FEE BY CALCULATING THE DIFFERENCE AT RS. 8,47,694/- THEREBY GIVING RELIEF OF RS.61,22,811/-. LD. CIT(A) ALSO DISMISSED THE ASSESSEES CLAIM OF DEDUCTION FOR CAPITAL EXPENDITURE SINCE TH E ASSESSEE WAS HELD TO BE ENGAGED IN THE BUSINESS PROFESSION AND N OT CARRYING ON CHARITABLE ACTIVITY. 20. AGAINST THE RELIEF GRANTED TO THE ASSESSEE BY LD. CIT(A) REVENUE IS NOT IN APPEAL BEFORE US AND ITS ONLY ASS ESSEE WHO HAS CHALLENGED THE FINDING GIVEN AGAINST IT BY LD. CIT( A). 21. LD. COUNSEL FOR THE ASSESSEE VEHEMENTLY ARGUED REFERRING TO FOLLOWING SYNOPSIS:- 1. ASSESSEE IS A CHARITABLE SOCIETY REGISTERED UNDE R THE M. P. SOCIETIES REGISTRATION ACT, 1973 SINCE 28.11.2016. REGISTRATION U/S 12A WAS GRANTED ON 20.03.2008. THE OBJECT OF THE SO CIETY IS IMPARTING EDUCATION. TRINITY INSTITUTE OF TECHNOLOG Y AND RESEARCH (INSTITUTE) IS THE COLLEGE ESTABLISHED UNDER THE AS SESSEE SOCIETY. THIS COLLEGE IMPARTS EDUCATION BY OFFERING VARIOUS COURS ES WHICH INCLUDE BACHELOR OF ENGINEERING IN VARIOUS BRANCHES LIKE CI VIL ENGINEERING, MECHANICAL ENGINEERING, ELECTRONICS AND TELECOMMUNI CATION SHRI JAIRAM EDUCATION SOCIETY ITA NO.90 & 548/IND/2019 49 ENGINNERING, COMPUTER SCIENCE AND INFORMATION TECHN OLOGY. THIS INSTITUTE ALSO OFFERS COURSES FOR MBA AND M.TECH. [ PB 01 18] 2. IT IS ALSO SUBMITTED THAT THE ASSESSEE SOCIETY I S APPROVED BY VARIOUS BODIES LIKE ALL INDIA COUNCIL OF TECHNICAL EDUCATION (AICTE), NEW DELHI, NATIONAL COUNCIL FOR TEACHERS EDUCATION (STATUTORY BODY OF GOVERNMENT OF INDIA) AND DIRECTOR OF TECHNICAL E DUCATION, GOVERNMENT OF INDIA. THE INSTITUTE IS ALSO AFFILIAT ED TO RAJIV GANDHI PRODHOYGIK VISHWAVIDYALAY AND BARKARTULLAH UNIVERSI TY, BHOPAL. 1635 STUDENTS ARE STUDYING VARIOUS COURSES IN ITS I NSTITUTE. THUS, THE ASSESSEE IS CARRYING OUT THE ACTIVITIES GENUINELY A ND IN ACCORDANCE TO THE OBJECTS OF THE SOCIETY. [PB 09-18] 3.RECOGNITION FROM NATIONAL COUNCIL FOR TEACHER EDU CATION, A STATUTORY BODY OF THE GOVERNMENT OF INDIA REQUIRES INTER ALIA, THE APPLICANT EDUCATIONAL INSTITUTE TO CLEAR PHYSICAL I NSPECTION BY WAY OF INPUT FROM THE VISITING TEAM IN THE FORM OF THE FOR M OF REPORT AND VIDEOGRAPHY AND RECOMMENDATION OF THE STATE GOVERNM ENT. HAVING GONE THROUGH THESE PROCESSES FOR RECOGNITION FROM A STATUTORY BODY OF GOVERNMENT OF INDIA ITSELF ESTABLISHES THE CARRYING OUT OF EDUCATION BY THE ASSESSEE. [PB 11, THIRD PARA] 4.NOTICE U/S 148 WAS ISSUED ON 28.03.2017. REASONS RECORDED FOR ISSUANCE OF NOTICE U/S 148 REFER TO THE SEARCH COND UCTED IN THE HARIRAMANI GROUP, BHOPAL ON 30.08.2016. DURING THE COURSE OF CONDUCT OF SEARCH, CERTAIN DOCUMENTS WERE FOUND AND SEIZED FROM THE RESIDENCE OF SHRI PRAKASH HARIRAMANI WHICH RELATE T O THE ASSESSEE. THESE DOCUMENTS ARE LPS -6, LPS-7 AND LPS-LL. [PB 3 8] 5. NOWHERE IT HAS BEEN PROVIDED IN SECTION 13 THAT IF SOME PART OF THE INCOME IS APPLIED FOR THE BENEFIT OF PERSONS MENTIO NED IN SECTION 13(3), THEN THE INCOME OF THE INSTITUTION WILL TAKE COLOUR OF BUSINESS AND IT WILL BECOME AUTOMATICALLY ASSESSABLE U/S 28 OF THE ACT. SECTION 13 PROVIDES THAT ONLY THE SAID PART OF THE INCOME WILL NOT BE QUALIFIED FOR THE PURPOSE OF EXEMPTION/DEDUCTION U/ S 11 AND 12 OF THE ACT. [PB 45] 6. BY APPLYING THE PROVISIONS OF SECTION 11 AND 12, COMPUTATION OF INCOME WAS SUBMITTED BY ASSESSEE ACCORDING TO WHICH , LOSS OF RS. 4,82,20,098 WAS CLAIMED BY THE ASSESSEE, INCLUDING CLAIM FOR CAPITAL EXPENDITURE. [PB 46] 7.WITHOUT PREJUDICE TO THE CLAIM OF ASSESSEE U/S 11 & 12, LOSS OF RS. 1,56,43,480 WAS ARRIVED AT BY APPLYING THE PROVISIO NS OF SECTION 28 FOR WHICH COMPUTATION WAS SUBMITTED. [PB 41] 8.IN THE REASONS RECORDED, REFERENCE HAS BEEN MADE TO VARIOUS LOOSE PAPERS ON WHICH VARIOUS ROUGH NOTING, JOTTINGS, CAL CULATIONS ARE MADE. IT IS ONTHIS BASIS THAT INFERENCE HAS BEEN DR AWN BY THE LD. AO. IT IS SUBMITTED THAT SUCH ROUGH NOTING, JOTTING S, CALCULATIONS HAVE NO EVIDENTIARY VALUE IN THE ABSENCE OF CORROBORATIV E AND INDEPENDENT EVIDENCES. RELIANCE IS PLACED ON THE DECISIONS OF T HE HON'BLE SUPREME COURT IN THE CASE OF COMMON CLAUSE - 30 ITJ 197 AND V C SHUKLA. [PB 47] 9. NO ENQUIRY HAS BEEN CONDUCTED BY LD. AO FROM THE EMPLOYEES WHO ARE ALLEGED TO HAVE BEEN PAID HIGHER SALARY BY CHEQ UES AND AMOUNT SHRI JAIRAM EDUCATION SOCIETY ITA NO.90 & 548/IND/2019 50 IS RECEIVED BACK FROM THEM IN CASH. NO SUCH CORROBO RATIVE AND INDEPENDENT EVIDENCE EXISTS TO AUTHENTICATE THE NOT ING AND JOTTINGS ON THE LOOSE DOCUMENTS SEIZED. [PB 48] 10. IT IS A SETTLED LAW THAT NO ADDITION CAN BE MAD E MERELY ON THE BASIS OF LOOSE SHEETS WITHOUT ANY CORROBORATIVE AND INDEPENDENT EVIDENCE. LOOSE SHEETS DO NOT FORM 'BOOKS OF ACCOUN TS' AND ENTRIES IN SUCH LOOSE SHEETS ARE IRRELEVANT AND NOT ADMISSI BLE U/S 34 OF THE EVIDENCE ACT. ONLY WHERE THE ENTRIES ARE IN THE BOO KS OF ACCOUNTS REGULARLY KEPT, DEPENDING ON THE NATURE OF OCCUPATI ON, THOSE ARE ADMISSIBLE. IN THE CASE OF V C SHUKLA (SUPRA), IT HAS BEEN HELD THAT INDEPENDENT EVIDENCE IS NECESSARY AS TO THE TRUSTWO RTHINESS OF THOSE ENTRIES WHICH IS A REQUIREMENT TO FASTEN THE LIABIL ITY. IT ALSO HELD THAT MEANING OF ACCOUNT BOOKS WOULD BE SPIRAL NOTE BOOK/ PAD BUT NOT LOOSE SHEETS. [PB 48] 11. IN THE INSTANT CASE, THE DOCUMENTS REFERRED IN THE REASONS RECORDED WERE SEIZED FROM THE RESIDENTIAL PREMISES OF SHRI PRAKASH HARIRAMANI. IT IS NOT EVIDENT FROM THE DOCUMENTS SO SEIZED IF THESE ARE RELATED ASSESSEE OR ARE JUST THE ROUGH NOTING A ND JOTTINGS DONE BY HIM FOR HIS PERSONAL REFERENCES. [PB 49] 12. THERE IS NO COGENT AND POSITIVE MATERIAL ON RECORD IN THE FORM OF STATEMENT OF ANY EMPLOYEE TO SUBSTANTIATE THAT THE ASSESSEE HAD CLAIMED BOGUS SALARIES IN INCOME & EXPENDITURE ACCOUNT. THERE IS NO STATEMENT OF ANY EMPLOYEE SAYING THAT THEY WERE PAI D HIGHER AMOUNTS IN CHEQUE AND THEREAFTER DIFFERENCE AMOUNT WAS REPAID BY THEM TO THE MEMBERS OF THE SOCIETY. LD. AO ALSO FAI LED TO BRING ON RECORD ANY COGENT MATERIAL TO SUPPORT HIS ALLEGATIO NS. [PB 49] 13. THERE IS NO EVIDENCE ON RECORD TO ESTABLISH THAT ON E OF THE TRUSTEE, SHRI VIJAY HARIRAMANI HAS TAKEN THE EXCESS CASH GEN ERATED FROM BOOKING OF ALLEGED BOGUS SALARY. LD. AO HAS MADE AD DITION WITHOUT BRINGING ON RECORD ANY COGENT AND POSITIVE MATERIAL FOUND DURING THE COURSE OF CONDUCT OF SEARCH. [PB 49] 14. SHRI VIJAY HARIRAMANI WAS ALSO COVERED BY THE SEARC H CONDUCTED IN THE HARIRAMANI GROUP. NO EVIDENCE/DOCUMENT WAS F OUND TO ESTABLISH CORROBORATIVELY THAT HE HAD SIPHONED OFF THE FUNDS OF THE INSTITUTION BY BOOKING OF THE ALLEGED BOGUS SALARY AND TAKING EXTRA CASH. [PB 49] 15.THE SEIZED PAPER DOES NOT REFLECT IF ANY AMOUNT WAS PAID TO SHRI VIJAY HARIRAMANI. ASSESSEE SUBMITS THAT THE AUTHOR OF THE PAPER IS NOT KNOWN AND THE BASIS OF TABULATION IS NOT APPEAR ING IN THE PAPER. SEARCH WAS ALSO CONDUCTED IN THE PREMISES OF SHRI V IJAY HARIRAMANI BUT NOTHING CORROBORATIVE WAS FOUND TO ESTABLISH TH AT HE RECEIVED AN AMOUNT OF RS. 5,61,877 FROM THE ASSESSEE INSTITUTIO N. FURTHER THERE IS NO CORROBORATIVE EVIDENCE TO ESTABLISH THE FLOW OF MONEY FROM THE ASSESSEE INSTITUTION TO SHRI VIJAY HARIRAMANI. ADDI TION BASED MERELY ON SURMISES AND CONJECTURES IS BAD IN LAW, UNSUSTAI NABLE AND OUGHT TO BE DELETED. [PB 50] 16.WITHOUT PREJUDICE, DENIAL OF WHOLE EXEMPTION IS UNLAWFUL AND BAD IN LAW. EXEMPTION UNDER SECTION 11 & 12 MAY BE LIMITED ONLY TO THE SHRI JAIRAM EDUCATION SOCIETY ITA NO.90 & 548/IND/2019 51 AMOUNT WHICH HAS BEEN CONSIDERED FOR SECTION 13(1). RELIANCE IS PLACED ON THE FOLLOWING LUDICIAL PRECEDENTS - [PB 50-54] A. WORKING WOMEN'S FORUM - [2014] 365 ITR 353 - MADRAS HIGH COURT B. SHETH MAFATLAL GAGALBHAI FOUNDATION TRUST - 249 ITR 533 - BOMBAY HIGH COURT C. LOKMANYA TILAK JANKALYAN -ITA NO. 384/NAG/2012 D. AUDYOGIK SHIKSHAN MANDAI [2019] 101 TAXMANN.COM 247 (BORN), DATED 18.12.2018 17.ASSESSEE SUBMITS THAT THE DIFFERENCE OF THE FEES IS NOT ON ACCOUNT OF UNDER RECORDINGS OF FEE RECEIPTS BUT IT IS DUE T O PROJECTIONS, JOTTINGS, ETC. THESE FIGURES ARE MERELY FOR ESTIMATION OF COL LECTION OF FEE. THE DOCUMENT CONTAINS BROAD NOTING OF VARIOUS ITEMS AND DOES NOT REFLECT THE ACTUAL FIGURES. [PB 55] 22. LD. COUNSEL FOR THE ASSESSEE FURTHER REFERRED T O THE FOLLOWING WRITTEN SUBMISSIONS: A. APROPOS GROUND NO.1 INITIATION OF PROCEEDINGS U/S 148 IS BAD IN LAW, WITHOUT JURISDICTION 1. NOTICE U/S 148 WAS ISSUED ON 28.03.2017. IN THE REA SONS RECORDED REFERENCE HAS BEEN MADE TO THE VARIOUS DOCUMENTS SE IZED FROM THE RESIDENCE OF SHRI PRAKASH HARIRAMANI DURING THE COU RSE OF CONDUCT OF SEARCH ON 30.08.2016. THESE DOCUMENTS ARE LPS -6, L PS-7 AND LPS- 11. [PB 38] 2. THE SEIZED DOCUMENTS SO REFERRED IN THE REASONS REC ORDED ARE THE VARIOUS LOOSE PAPERS. ON THESE LOOSE PAPERS VARIOUS ROUGH NOTING, JOTTINGS, CALCULATIONS ARE MADE. IT IS ON THIS BASI S THAT ADVERSE INFERENCES HAVE BEEN DRAWN BY THE LD. AO. 3. NOTHING CORROBORATIVE, COGENT, POSITIVE AND INDEPEN DENT EVIDENCES HAVE BEEN BROUGHT ON RECORD TO NEGATE THE SUBMISSIO NS MADE BY THE ASSESSEE. IT IS SUBMITTED THAT SUCH ROUGH NOTING, J OTTINGS, CALCULATIONS FOUND FROM THE RESIDENCE OF SHRI PRAKASH HARIRAMANI DURING HIS SEARCH HAVE NO EVIDENTIARY VALUE IN THE ABSENCE OF CORROBORATIVE AND INDEPENDENT EVIDENCES. RELIANCE IS PLACED ON THE DE CISIONS OF THE HONBLE SUPREME COURT IN THE CASE OF COMMON CLAUSE 30 ITJ 197 AND V C SHUKLA. [PB 47] 4. THE SOLE BASIS ON WHICH NOTICE U/S 148 HAS BEEN ARE THE LOOSE DOCUMENTS SEIZED FROM THE RESIDENCE OF SHRI PRAKASH HARIRAMANI DURING THE COURSE OF CONDUCT OF SEARCH OPERATIONS. IT IS NOT EVIDENT FROM THE DOCUMENTS SO SEIZED IF THESE ARE RELATED A SSESSEE OR ARE JUST THE ROUGH NOTING AND JOTTINGS DONE BY HIM FOR HIS PERSONAL REFERENCES. PROCEEDINGS INITIATED ON THE BASIS OF S UCH LOOSE PAPERS OUGHT BE QUASHED. B. APROPOS GROUND NO.2 INCOME OF THE ASSESSEE SOCIET Y ASSESSED AS BUSINESS INCOME U/S 28 SHRI JAIRAM EDUCATION SOCIETY ITA NO.90 & 548/IND/2019 52 1. IT IS SUBMITTED THAT ASSESSEE IS A CHARITABLE SOCIE TY REGISTERED UNDER THE M. P. SOCIETIES REGISTRATION ACT, 1973 SINCE 28 .11.2016. REGISTRATION U/S 12A WAS GRANTED ON 20.03.2008. THE OBJECT OF THE SOCIETY IS IMPARTING EDUCATION. TRINITY INSTITUTE O F TECHNOLOGY AND RESEARCH (INSTITUTE) IS THE COLLEGE ESTABLISHED UND ER THE ASSESSEE SOCIETY. THIS COLLEGE IMPARTS EDUCATION BY OFFERING VARIOUS COURSES WHICH INCLUDE BACHELOR OF ENGINEERING IN VARIOUS BR ANCHES LIKE CIVIL ENGINEERING, MECHANICAL ENGINEERING, ELECTRONICS AN D TELECOMMUNICATION ENGINNERING, COMPUTER SCIENCE AND INFORMATION TECHNOLOGY. THIS INSTITUTE ALSO OFFERS COURSES FOR MBA AND M.TECH. [PB 01 18] 2. IT IS ALSO SUBMITTED THAT THE ASSESSEE SOCIETY IS A PPROVED BY VARIOUS BODIES LIKE ALL INDIA COUNCIL OF TECHNICAL EDUCATIO N (AICTE), NEW DELHI, NATIONAL COUNCIL FOR TEACHERS EDUCATION (STA TUTORY BODY OF GOVERNMENT OF INDIA) AND DIRECTOR OF TECHNICAL EDUC ATION, GOVERNMENT OF INDIA. THE INSTITUTE IS ALSO AFFILIAT ED TO RAJIV GANDHI PRODHOYGIK VISHWAVIDYALAY AND BARKARTULLAH UNIVERSI TY, BHOPAL. 1635 STUDENTS ARE STUDYING VARIOUS COURSES IN ITS I NSTITUTE. THUS, THE ASSESSEE IS CARRYING OUT THE ACTIVITIES GENUINELY A ND IN ACCORDANCE TO THE OBJECTS OF THE SOCIETY. [PB 09-18] 3. RECOGNITION FROM NATIONAL COUNCIL FOR TEACHER EDUCA TION, A STATUTORY BODY OF THE GOVERNMENT OF INDIA REQUIRES INTER ALIA , THE APPLICANT EDUCATIONAL INSTITUTE TO CLEAR PHYSICAL INSPECTION BY WAY OF INPUT FROM THE VISITING TEAM IN THE FORM OF REPORT AND VIDEOGR APHY AND RECOMMENDATION OF THE STATE GOVERNMENT. HAVING GONE THROUGH THESE PROCESSES FOR RECOGNITION FROM A STATUTORY BODY OF GOVERNMENT OF INDIA ITSELF ESTABLISHES THE CARRYING OUT OF EDUCAT ION BY THE ASSESSEE. [PB 11, THIRD PARA] 4. LD. AO ALLEGED THAT THE ASSESSEE SOCIETY HAS PAID B OGUS SALARY OF RS. 20,48,173 AND CASH PAYMENT OF RS. 5,61,877 TO O NE OF THE TRUSTEES SHRI PRAKASH HARIRAMANI. THEREBY, LD. AO C ONCLUDED THAT THE ASSESSEE HAS VIOLATED THE PROVISIONS OF SECTION 13(1)(C) RWS 13(2). 5. IN VIEW OF THE ABOVE MENTIONED ALLEGED BOGUS SALARY PAYMENT AND CASH PAYMENT, LD. AO CONCLUDED THAT ASSESSEE SOCIET Y IS NOT FOR CHARITABLE PURPOSE BUT IS ENGAGED IN BUSINESS OR PR OFESSION. THUS THE INCOME EARNED IS TO BE TAXED UNDER THE HEAD PROFIT S AND GAINS FROM BUSINESS OR PROFESSION. [AO PAGE 10 PARA 17] 6. IT IS SUBMITTED THAT IF IN ANY CASE THE PROVISIONS OF SECTION 13 ARE NOT COMPLIED WITH THEN THAT PART OF THE INCOME OF THE S AID TRUST OR INSTITUTION SHALL NOT QUALIFY FOR THE PURPOSE OF EX EMPTION U/S 11 AND 12 OF THE ACT. 7. SECTION 13 HAS NOWHERE PROVIDED THAT IF THE SAID PR OVISIONS ARE NOT COMPLIED WITH THEN THE INCOME OF THE SAID TRUST OR INSTITUTION SHALL BE ASSESSED U/S 28 AS PROFIT AND GAINS FROM BUSINESS O R PROFESSION. 8. BOTH LD. AO AND LD. CIT(A) ERRED IN APPLYING THE PR OVISIONS OF SECTION 13 AND ASSESSING THE INCOME OF THE ASSESSEE TRUST U /S 28. SHRI JAIRAM EDUCATION SOCIETY ITA NO.90 & 548/IND/2019 53 9. BY APPLYING THE PROVISIONS OF SECTION 11 AND 12, CO MPUTATION OF INCOME WAS SUBMITTED BY ASSESSEE ACCORDING TO WHICH , LOSS OF RS. 4,82,20,098 WAS CLAIMED BY THE ASSESSEE, INCLUDING CLAIM FOR CAPITAL EXPENDITURE. [PB 46] 10. WITHOUT PREJUDICE TO THE CLAIM OF ASSESSEE U/S 11 & 12 AND STRICTLY IN ALTERNATE, LOSS OF RS. 1,56,43,480 WAS ARRIVED AT BY APPLYING THE PROVISIONS OF SECTION 28 FOR WHICH COM PUTATION WAS SUBMITTED. LD. CIT(A) GRANTED RELIEF VIDE GROUND NO . 3 BY ACCEPTING THE FACT THAT ASSESSEE HAS INCURRED EXPENSES OF RS. 3,52,94,416 FOR RUNNING AND MANAGING THE EDUCATIONAL INSTITUTE. [PB 41 & CIT(A) PAGE 21 PARA 4.3] 11. ASSESSEE SUBMITS THAT DESPITE RELIEF GRANTED BY LD. CIT(A) FOR WHICH DEPARTMENT IS NOT IN APPEAL, ENTIRE CLAIM OF EXEMPTION U/S 11 & 12 CANNOT BE DISALLOWED BY RE-CHARACTERIZING IT A S INCOME UNDER THE HEAD PROFITS AND GAIN OF BUSINESS OR PROFESSION . ONLY THAT PART OF THE INCOME OF THE ASSESSEE SHALL NOT QUALIFY FOR THE PURPOSE OF EXEMPTION U/S 11 AND 12 OF THE ACT WHICH IS HELD TO BE COVERED U/S 13 AND NOT OTHERWISE. C. APROPOS GROUND NO.3 ALLEGATION OF BOGUS SALARY EX PENDITURE OF RS. 20,48,173 1. IN THE REASONS RECORDED, LD. AO HAS MADE REFERENCE TO THE DOCUMENT SEIZED FROM THE RESIDENTIAL PREMISES OF SHRI PRAKAS H HARIRAMANI AT PARA (III), PAGE 60 TO 63 OF LPS -11. ON THE BASIS OF THIS DOCUMENT, LD. AO HAS INFERRED THAT ASSESSEE HAS PAID BOGUS SALARY OF RS. 20,48,173. [AO PAGE 4 TO 7 AND PAGE 10 PARA 12 TO 1 4] 2. LOOSE PAPERS ON THE BASIS OF WHICH LD. AO HAS ALLEG ED THAT ASSESSEE HAS PAID BOGUS SALARY OF RS. 20,48,173 IS SOME WORK ING DONE BY A PERSON NOT KNOWN WHICH CONTAINS NAME OF EMPLOYEE, C ASH, CHEQUE AND DIFFERENCE FOR MONTHS FROM APRIL 2009 TO FEB 20 10 AND THEN TOTAL. THERE ARE TWO CATEGORIES TEACHING STAFF AN D NON-TEACHING STAFF. FOR EACH OF THE EMPLOYEE FOR EACH MONTH, THE RE IS A DIFFERENCE CALCULATED IN THIS WORKING BETWEEN CASH AND CHEQUE FIGURES. WHAT THIS DIFFERENCE DENOTES IS DIFFICULT TO DECIPHER. FOR THE VERY FIRST LINE ITEM WITH EMPLOYEE NAME BA NDE, CASH IN APRIL 09 IS NOTED AS 10000, CHEQUE IS NOTED AS 13000 AND DIFFERENCE IS NOTED AS 3000. SUCH A NOTING CAN BE READ IN MULTIPLE WAYS. LD. AO READ AND INFERRED THESE NOTING AS CHEQUE IS PAID TO THE EMPL OYEE OF 13000 AND DIFFERENCE OF 3000 IS TAKEN BACK FROM THE EMPLOYEE IN CASH. SUCH A UNILATERAL INFERENCE WITHOUT ANY CORROBORATIVE EVID ENCE, CROSS- VERIFICATION FROM ANY OF THE EMPLOYEES IS DEVOID OF ANY MERIT, ARBITRARY, BASELESS AND ABSURD. FOR THE SAME EMPLOY EE, IN THE MONTHS OF SEP 09 TO FEB 10, THE DIFFERENCE IS NOT ED AS 0. HOWEVER, FIGURE OF 14000 IS NOTED IN THE ROW OF CASH. SHRI JAIRAM EDUCATION SOCIETY ITA NO.90 & 548/IND/2019 54 FROM ONE SUCH ABOVE SAMPLE READING OF THE LOOSE PAP ER, IT IS EVIDENTLY DEMONSTRATED THAT IT WAS SOME UNKNOWN EXE RCISE DONE BY A PERSON NOT KNOW TO THE ASSESSEE AND WHICH WAS NOT FOUND IN THE POSSESSION OF THE ASSESSEE. 3. AS PER THE LOOSE PAPER, THE SALARY PAID BOTH BY CHE QUE AND IN CASH TO TEACHING AND NON-TEACHING STAFF AMOUNTS TO RS. 1,22 ,56,751. OUT OF THIS, LD. AO HAS ALLEGED THAT AN AMOUNT OF RS. 20,4 8,173 IS BOGUS AND THE BALANCE SALARY PAYMENT OF RS. 1,02,08,578 I S ACCEPTED. TOTAL AMOUNT OF SALARY REPORTED IN THE AUDITED INCO ME AND EXPENDITURE ACCOUNT OF THE ASSESSEE IS RS. 1,00,02, 326. IT IS A SETTLED LAW THAT ANY DOCUMENT CAN BE EITHER ACCEPTE D AS A WHOLE OR DENIED IN ITS ENTIRETY. ADDITION MADE ON THE BASIS OF SUCH PARTLY ACCEPTED DOCUMENT IS BAD IN LAW AND OUGHT TO BE DEL ETED. [AO PAGE 10 PARA 12-13-14 AND PB 32] 4. THERE IS NO COGENT AND POSITIVE MATERIAL ON RECORD IN THE FORM OF STATEMENT OF ANY EMPLOYEE TO SUBSTANTIATE THAT THE ASSESSEE HAD CLAIMED BOGUS SALARIES IN INCOME & EXPENDITURE ACCO UNT. THERE IS NO STATEMENT OF ANY EMPLOYEE SAYING THAT THEY WERE PAI D HIGHER AMOUNTS IN CHEQUE AND THEREAFTER DIFFERENCE AMOUNT WAS REPAID BY THEM TO THE MEMBERS OF THE SOCIETY. LD. AO ALSO FAI LED TO BRING ON RECORD ANY COGENT MATERIAL TO SUPPORT HIS ALLEGATIO NS FOR WHICH HE HAD ALL THE POWERS AND WHERE WHITTLE. HE CHOSE NOT TO TAKE APPROPRIATE ACTIONS FOR CROSS-CHECKING THE SAME FRO M THE CONCERNED EMPLOYEES. [PB 48-49] 5. NOTHING CORROBORATIVE HAS BEEN BROUGHT ON RECORD TO ESTABLISH THAT THE THERE IS SHORTAGE OF CASH AND THAT ONE OF THE T RUSTEES HAS SIPHONED THIS EXCESS CASH GENERATED ON ACCOUNT OF B OOKING OF ALLEGED BOGUS SALARY EXPENSES. IT IS SUBMITTED THAT ONE OF THE TRUSTEES, SHRI VIJAY HARIRAMANI WAS ALSO SUBJECTED TO THE SEARCH B UT NO DOCUMENTS OR MATERIAL WAS SEIZED TO ESTABLISH THAT THE SAID T RUSTEE SIPHONED THE FUNDS OF THE ASSESSEE SOCIETY BY BOOKING BOGUS SALA RY EXPENSES. 6. IT IS A SETTLED LAW THAT NO ADDITION CAN BE MADE ME RELY ON THE BASIS OF LOOSE SHEETS WITHOUT ANY CORROBORATIVE AND INDEP ENDENT EVIDENCE. LOOSE SHEETS DO NOT FORM BOOKS OF ACCOUNTS AND EN TRIES IN SUCH LOOSE SHEETS ARE IRRELEVANT AND NOT ADMISSIBLE U/S 34 OF THE EVIDENCE ACT. ONLY WHERE THE ENTRIES ARE IN THE BOOKS OF ACC OUNTS REGULARLY KEPT, DEPENDING ON THE NATURE OF OCCUPATION, THOSE ARE ADMISSIBLE. HONBLE APEX COURT IN THE CASE OF V C SHUKLA AND CO MMON CAUSE (A REGISTERED SOCIETY) 30 ITJ 197, HAS BEEN HELD THAT INDEPENDENT EVIDENCE IS NECESSARY AS TO THE TRUSTWORTHINESS OF THOSE ENTRIES WHICH IS A REQUIREMENT TO FASTEN THE LIABILITY. IT IS ALSO HELD THAT MEANING OF ACCOUNT BOOKS WOULD BE SPIRAL NOTE BOOK/ PAD BUT NOT LOOSE SHEETS. [PB 48] 7. CONSIDERING THE ABOVE FACTS AND CIRCUMSTANCES OF TH E CASE AND THE APPLICABLE LAW, IT IS HUMBLY SUBMITTED THAT THE ADD ITION OF RS. 20,48,173 MADE ON ACCOUNT OF ALLEGED PAYMENT OF BOG US SALARY OUGHT TO BE DELETED. SHRI JAIRAM EDUCATION SOCIETY ITA NO.90 & 548/IND/2019 55 D. APROPOS GROUND NOS. 4 AND 5 PAYMENT OF RS. 5,61,8 77 TO SHRI VIJAY HARIRAMANI, ONE OF THE TRUSTEES AND THUS PROVISIONS OF SECTION 13(1)(C) ARE VIOLATED. THEREBY, THE ENTIRE EXEMPTION CLAIMED U/S 11 AND 12 DENIED. 1. MERELY ON THE BASIS OF ONE SEIZED LOOSE PAPER WITH THE DATE AS ON 30.06.2010, LD. AO HAS CONCLUDED THAT CASH OF RS. 5,61,877 HAS BEEN PAID ONE OF THE TRUSTEES OF THE ASSESSEE SOCIE TY, SHRI VIJAY HARIRAMANI, VIOLATING THE PROVISIONS OF SECTION 13( 1)(C). [AO PAGE 9, BOTTOM] 2. IT IS SUBMITTED THAT THE SEIZED PAPER DOES NOT RELA TE TO THE ASSESSMENT YEAR UNDER CONSIDERATION I.E. AY 2010-11 . IN THE VERY FIRST LINE OF THIS LOOSE PAPER, PERIOD NOTED IS (0 1.04.2009 TO 30.06.2010). ALSO, IN THE LAST LINE, FOR SHORTAGE OF CASH, IT IS NOTED AS ON 30.06.2010. IT IS EVIDENT THAT THESE NOTING ON THE SAID LOOSE PAPER ARE BEYOND THE PERIOD COVERED BY AY 2010-11 A ND CANNOT BE RELIED UPON FOR TAKING AN ADVERSE VIEW IN THE ASSES SMENT FOR AY 2010-11. [AO PAGE 9] ALSO, NOTING DOES NOT IN ANY MANNER REFLECT IF ANY AMOUNT WAS PAID TO SHRI VIJAY HARIRAMANI. ALSO THE AUTHOR OF THE PA PER IS NOT KNOWN AND THE BASIS OF TABULATION IS NOT APPEARING IN THE PAPER. SEARCH WAS ALSO CONDUCTED IN THE PREMISES OF SHRI VIJAY HARIRA MANI BUT NOTHING CORROBORATIVE WAS FOUND TO ESTABLISH THAT HE RECEIV ED AN AMOUNT OF RS. 5,61,877 FROM THE ASSESSEE INSTITUTION. [PB 49] 3. NOTHING CORROBORATIVE HAS BEEN BROUGHT ON RECORD TO ESTABLISH THE FLOW OF MONEY FROM THE ASSESSEE INSTITUTION TO SHRI VIJAY HARIRAMANI. LD. AO HAS MADE THE ADDITION OF RS. 5,61,877 MERELY ON SURMISES AND CONJECTURES WHICH IS BAD IN LAW, UNSUSTAINABLE AND OUGHT TO BE DELETED. [PB 50] 4. CONSIDERING THE ABOVE FACTS AND CIRCUMSTANCES OF TH E CASE AND THE APPLICABLE LAW, IT IS HUMBLY SUBMITTED THAT THE ADD ITION OF RS. 5,61,877 MADE ON ACCOUNT OF ALLEGED PAYMENT TO ONE OF THE TRUSTEES, SHRI VIJAY HARIRAMANI OUGHT TO BE DELETED, MORE PAR TICULARLY WHEN THE PERIOD / DATE NOTED ON THE SAID LOOSE PAPER DOE S NOT RELATE TO THE IMPUGNED ASSESSMENT YEAR I.E. AY 2010-11. E. APROPOS GROUND NO. 6 ADDITION OF RS. 8,47,694 SUS TAINED AS UNRECORDED FEES 1. THE ADDITION HAS BEEN MADE MERELY ON THE BASIS OF T HE LOOSE PAPER. IT IS SUBMITTED THAT THE DIFFERENCE OF THE FEES IS NOT ON ACCOUNT OF UNDER-RECORDINGS OF FEE RECEIPTS BUT IT IS DUE TO P ROJECTIONS, JOTTINGS, ETC. THESE FIGURES ARE MERELY FOR ESTIMATION OF COL LECTION OF FEE DONE BY SOME PERSON NOT KNOWN TO ASSESSEE. THE DOCUMENT CONTAINS BROAD NOTING OF VARIOUS ITEMS AND DOES NOT REFLECT THE ACTUAL FIGURES. [AO PAGE 12 AND PB 55] 2. IT IS A SETTLED LAW THAT NO ADDITION CAN BE MADE ME RELY ON THE BASIS OF LOOSE SHEETS WITHOUT ANY CORROBORATIVE AND INDEP ENDENT EVIDENCE. LOOSE SHEETS DO NOT FORM BOOKS OF ACCOUNTS AND EN TRIES IN SUCH LOOSE SHEETS ARE IRRELEVANT AND NOT ADMISSIBLE U/S 34 OF THE EVIDENCE ACT. ONLY WHERE THE ENTRIES ARE IN THE BOOKS OF ACC OUNTS REGULARLY SHRI JAIRAM EDUCATION SOCIETY ITA NO.90 & 548/IND/2019 56 KEPT, DEPENDING ON THE NATURE OF OCCUPATION, THOSE ARE ADMISSIBLE. IN THE CASE OF V C SHUKLA (SUPRA), IT HAS BEEN HELD TH AT INDEPENDENT EVIDENCE IS NECESSARY AS TO THE TRUSTWORTHINESS OF THOSE ENTRIES WHICH IS A REQUIREMENT TO FASTEN THE LIABILITY. IT ALSO HELD THAT MEANING OF ACCOUNT BOOKS WOULD BE SPIRAL NOTE BOOK/ PAD BUT NOT LOOSE SHEETS. [PB 48] 3. ACTUAL COLLECTION OF FEES AFTER TAKING INTO ACCOUNT ADVANCE RECEIPTS AT THE BEGINNING AND CLOSE OF THE YEAR WAS TABULATED. THERE WAS A SMALL DIFFERENCE OF RS. 8,47,694 BETWEEN THE ROUGH JOTTING ON THE LOOSE PAPER AND THIS TABULATION. LD. CIT(A) GRANTED THE RELIED AND SUSTAINED THE ADDITION FOR THIS AMOUNT OF RS. 8,47, 694. [PB 55] IN THIS CONNECTION IT IS SUBMITTED THAT THE FIGURE APPEARING ON THE LOOSE PAPER IS A ROUGH NOTING IN A BROAD MANNER WIT H THE USE OF WORDS MAJOR EXPENSES, ETC. THE DIFFERENCE OF RS. 8,47,694 IN NO WAY REPRESENTS THE REAL RECEIPTS OF THE ASSESSEE IN ABSENCE OF ANY CORROBORATIVE MATERIAL BROUGHT ON RECORD BY THE LD. AO WHICH OUGHT TO BE DELETED. F. APROPOS GROUND NO. 7 CAPITAL EXPENDITURE OF RS. 3 ,25,76,619 INCURRED TOWARDS APPLICATION OF INCOME U/S 11 AND 1 2 BE ALLOWED 1. WHILE DISPOSING GROUND NO. 3, LD. CIT(A) HAS ACCEPT ED THE FACT OF INCURRING OF EXPENSES OF RS. 3,52,94,416 FOR RUNNIN G AND MANAGING THE EDUCATIONAL INSTITUTE AND GIVEN THE RELIEF, FOR WHICH THE DEPARTMENT IS NOT IN APPEAL. CONDUCT OF EDUCATIONAL ACTIVITY WHICH IS IN ACCORDANCE WITH THE OBJECTS OF THE ASSESSEE IS N OT IN DISPUTE WITH THIS FINDING GIVEN BY LD. CIT(A) AND ATTAINS FINALI TY. [CIT(A) PAGE 21, PARA 4.3] 2. IT IS EVIDENTLY DEMONSTRATED THAT ASSESSEE IS A CHA RITABLE SOCIETY REGISTERED UNDER THE M. P. SOCIETIES REGISTRATION A CT, 1973 SINCE 28.11.2016. REGISTRATION U/S 12A WAS GRANTED ON 20. 03.2008. THE OBJECT OF THE SOCIETY IS IMPARTING EDUCATION. TRINI TY INSTITUTE OF TECHNOLOGY AND RESEARCH (INSTITUTE) IS THE COLLEGE ESTABLISHED UNDER THE ASSESSEE SOCIETY. THIS COLLEGE IMPARTS EDUCATIO N BY OFFERING VARIOUS COURSES WHICH INCLUDE BACHELOR OF ENGINEERI NG IN VARIOUS BRANCHES LIKE CIVIL ENGINEERING, MECHANICAL ENGINEE RING, ELECTRONICS AND TELECOMMUNICATION ENGINNERING, COMPUTER SCIENCE AND INFORMATION TECHNOLOGY. THIS INSTITUTE ALSO OFFERS COURSES FOR MBA AND M.TECH. ASSESSEE IS ALSO REGISTERED U/S 12AA OF THE ACT. 3. AS PER THE PROVISIONS OF THE ACT, ASSESSEE IS ELIGI BLE TO CLAIM EXEMPTION U/S 11 AND 12. THESE PROVISIONS ALLOW THE AMOUNT INCURRED TOWARDS CAPITAL EXPENDITURE AS APPLICATION OF FUNDS WITHIN THE MEANING OF SECTION 11. ACCORDINGLY, IT IS MOST HUMBLY SUBMITTED THAT THE AMOUNT OF RS. 3,25,76,619 INCURRED BY THE ASSESSEE SOCIETY TOWARDS CAPITAL EXPENDITURE BE ALLOWED AS APPLICATI ON OF FUNDS U/S 11. [PB 46] 4. IT IS SUBMITTED THAT THE PROVISIONS SECTION 11 WERE AMENDED ACCORDING TO WHICH THE CAPITAL EXPENDITURE INCURRED WERE NOT CONSIDERED AS APPLICATION OF FUND APPLICABLE FROM A Y 2015-16 AND ONLY DEPRECIATION WAS TO BE CONSIDERED AS APPLICATI ON OF FUNDS. THIS AMENDMENT IS APPLICABLE PROSPECTIVELY. THE YEAR UND ER CONSIDERATION SHRI JAIRAM EDUCATION SOCIETY ITA NO.90 & 548/IND/2019 57 IS AY 2010-11 HENCE THE AMENDED PROVISIONS ARE NOT APPLICABLE. ACCORDINGLY, AMOUNT OF CAPITAL EXPENDITURE OF RS. 3 ,25,76,619 BE KINDLY ALLOWED AS APPLICATION OF FUNDS U/S 11 AND 1 2. CONSIDERING THE ABOVE FACTS, CIRCUMSTANCES OF THE C ASE, SUBMISSIONS MADE, DOCUMENTS ON RECORD AND JUDICIAL PRECEDENTS, ADDITIONS/DISALLOWANCE MADE AND RE-CHARACTERISATION DONE BY LD. AO OUGHT TO BE DELETED. 23. PER CONTRA LD. DR SUPPORTED THE FINDING OF BOTH LOWER AUTHORITIES AND ALSO SUBMITTED THAT SEIZED LOOSE PA PERS INDICATES THAT THE ASSESSEE SOCIETY IS INVOLVED IN DIVERTING THE FUNDS OF THE SOCIETY TO THE BENEFIT OF ITS MEMBERS AND ALSO CLAI MED EXCESS EXPENDITURE BY ISSUING SALARY CHEQUE OF HIGHER AMOU NT TO THE EMPLOYEES AND TAKING THE CASH BACK FROM THEM. 24. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORDS PLACED BEFORE US AND CAREFULLY GONE THROUGH THE SUB MISSIONS MADE BY BOTH THE SIDES. 25. APROPOS TO GROUND NO.1 CHALLENGING THE INITIATI ON OF PROCEEDINGS U/S 148 OF THE ACT THE CONTENTION OF TH E ASSESSEE IS THAT NOTHING CORROBORATING COGENT/POSITIVE AND INDE PENDENT EVIDENCE HAS BEEN BROUGHT ON RECORD WHICH COULD SUP PORT THE ADVERSE INFLUENCE DRAWN BY THE LD. AO. WE, HOWEVER FIND NO MERIT IN THE CONTENTION OF LD. COUNSEL FOR THE ASSESSEE B ECAUSE THERE WERE LOOSE PAPERS FOUND DURING THE COURSE OF SEARCH BEARING NO. LPS-6, LPS-7 & LPS-11WHICH CONTAINED THE DETAILS OF SALARY OF SHRI JAIRAM EDUCATION SOCIETY ITA NO.90 & 548/IND/2019 58 TEACHING STAFF AND NON-TEACHING STAFF, PERSON WISE DETAILS OF SALARY PAYMENT, SUMMERY OF SOURCE OF FUNDS, SUNDRY CREDITO RS AND ALSO HAND WRITTEN DOCUMENTS SHOWING THE AMOUNT OF FEES C OLLECTION AND OTHER DETAILS. SO FAR AS THESE DOCUMENTS ARE CO NCERNED THEY ARE HAVING CONNECTION TO THE ASSESSEE SOCIETY AND I T CANNOT BE SAID THAT LD. AO PROCEEDED WITHOUT HAVING ANY ADVER SE MATERIAL IN ITS POSSESSION. WE, THEREFORE, FIND NO MERIT IN THIS GROUND NO.1 RAISED BY THE ASSESSEE AND THE SAME STANDS DISMISSE D. 26. APROPOS TO GROUND NO.2 THE ASSESSEE HAS CHALLEN GED THAT LD. CIT(A) ERRED IN CONFIRMING THE FINDING OF LD. AO TR EATING THE ASSESSEE OF CARRYING OUT BUSINESS AND THUS ASSESSIN G INCOME U/S 28 OF THE ACT. WE FIND THAT ASSESSEE SOCIETY IS REG ISTERED UNDER THE M.P. SOCIETY REGISTRATION ACT,1973, HOLDS REGISTRAT ION U/S 12AA OF THE ACT SINCE 20.03.2008. THE OBJECT OF THE SOCIETY IS IMPARTING EDUCATION. TRINITY INSTITUTE OF TECHNOLOGY AND RESE ARCH (INSTITUTE) IS THE COLLEGE ESTABLISHED UNDER THE ASSESSEE SOCIE TY OFFERING VARIOUS COURSES TO THE STUDENTS. THE ASSESSEE SOCIE TY IS APPROVED BY VARIOUS BODIES LIKE ALL INDIA COUNSEL OF TECHNIC AL EDUCATION (AICTE), NATIONAL COUNCIL FOR TEACHERS EDUCATION (S TATUTORY BODY OF GOVERNMENT OF INDIA) AND ALSO APPROVED BY DIRECT OR OF TECHNICAL EDUCATION, GOVERNMENT OF INDIA. IT IS ALS O AFFILIATED TO SHRI JAIRAM EDUCATION SOCIETY ITA NO.90 & 548/IND/2019 59 RAJIV GANDHI PRADHOYGIK VISHWAVIDYALAY AND BARKATUL LAH UNIVERSITY, BHOPAL. EXCEPT FOR THE ALLEGE SEIZED LO OSE PAPERS WHICH ONLY INDICATES SOME ACCOUNTING FIGURES THAT A LSO FOR A PARTICULAR PERIOD NOTHING ELSE HAS BEEN BROUGHT BEF ORE US WHICH COULD QUESTION THE GENUINENESS OF THE ACTIVITY OF I MPARTING EDUCATION BEING CARRIED OUT BY THE ASSESSEE SOCIETY . ALL THE DISCUSSION ARE ONLY CONFINED TO THE LOOSE PAPERS. R EVENUE AUTHORITIES HAVE NOT DISPUTED THE FACT THAT THE COL LEGE OWNED BY THE SOCIETY ARE RUNNING REGULARLY FOR IMPARTING EDU CATION UNDER VARIOUS STREAMS FOR LAST MANY YEARS, UNDER THE APPR OVAL OF RELATED ORGANIZATIONS OF CENTRAL GOVERNMENT. 26A. WE, THEREFORE, UNDER THE GIVEN FACTS AND CIRCU MSTANCES, ARE OF THE CONSIDERED VIEW THAT BOTH LOWER AUTHORITIES ERRED IN TREATING INCOME OF ASSESSEE AS BUSINESS INCOME. WE ARE OF THE VIEW THAT ASSESSEE IS NOT CARRYING OUT ANY BUSINESS OF PROFESSION AND IT IS ESTABLISHED THAT THE ASSESSEE IS A CHARIT ABLE SOCIETY RUNNING FOR CHARITABLE PURPOSE AND IMPARTING EDUCAT ION THROUGH ITS COLLEGES AND INSTITUTIONS AND THE OBJECTS OF TH E ASSESSEE SOCIETY FAILED UNDER THE PROVISIONS OF SECTION. 2(1 5) OF THE ACT AND IS NOT IN THE NATURE OF ADVANCEMENT OF ANY OTHER OB JECT OF GENERAL PUBLIC NOR IT IS INVOLVED IN CARRYING OUT OF ANY A CTIVITY IN THE SHRI JAIRAM EDUCATION SOCIETY ITA NO.90 & 548/IND/2019 60 NATURE OF TRADE, COMMERCE OR BUSINESS. THEREFORE NE ITHER THE PROVISO TO SECTION 2(15) ARE APPLICABLE TO THE ASSE SSEE NOR IT CAN BE HELD THAT ASSESSEE IS CARRYING OUT BUSINESS OF P ROFESSION. THUS, GROUND NO.2 OF THE ASSESSEE APPEAL IS ALLOWED . 27. APROPOS TO GROUND NO.3 FOR THE ALLEGED DISALLO WANCE OF BOGUS SALARY EXPENDITURE OF RS.20,48,173/- WE FIND THAT B ASED ON THE SEIZED LOOSE PAPERS LPS-11, THE LD. AO ALLEGED THAT THE ASSESSEE HAS PAID BOGUS SALARY OF RS.20,48,173/-. ON THE BAS IS OF THIS ADDITION WHICH IS A WORKING DONE ON A UNSIGNED PAPE R PREPARED BY AN UNKNOWN PERSON CONTAINS THE NAME OF EMPLOYEE, CASH, CHEQUE AND DETAILS FOR MONTHS FROM APRIL 2009 TO FE B 2010. WE ALSO FIND THAT SALARY PAID BOTH BY CHEQUE AND IN CA SH TO TEACHING AND NON-TEACHING STAFF AMOUNTS TO RS.1,22,56,751/- AND OUT OF THIS AMOUNT OF THE ALLEGED BOGUS SALARY OF RS.20,48 ,173/- IS REDUCED, THE BALANCE SALARY PAYMENT OF RS. 1,02,08, 578/-. HOWEVER IN THE AUDITED INCOME AND EXPENDITURE ACCOU NT OF THE ASSESSEE SALARY EXPENSES IS SHOWN AT RS.1,00,02,326 /-. IT IS A SETTLED LAW THAT ANY DOCUMENT CAN BE EITHER ACCEPTE D AS A WHOLE OR DENIED IN ITS ENTIRETY. WHEN THE SALARY EXPENDIT URE SHOWING IN THE INCOME AND EXPENDITURE ACCOUNT IS LESS THAN THE ALLEGED AMOUNT SHOWN IN THE LOOSE SHEETS, THERE REMAINS NO JUSTIFICATION OF DISALLOWING THE SHRI JAIRAM EDUCATION SOCIETY ITA NO.90 & 548/IND/2019 61 SALARY EXPENDITURE. EVEN OTHERWISE EXCEPT THESE LOO SE PAPERS NO OTHER INCRIMINATING MATERIAL WAS FOUND. THERE IS NO STATEMENT OF ANY EMPLOYEE STATING THAT THEY WERE PAID HIGHER AMO UNT IN CHEQUE AND DIFFERENCE AMOUNT WAS REPAID BY THEM TO THE MEMBERS OF THE SOCIETY. NO APPROPRIATE ACCOUNT WAS TAKEN BY THE LD. AO FOR CROSS CHECKING CONTENTS OF SEIZED LOOSE SHEETS WITH THE CONCERNED EMPLOYEE. HON'BLE APEX COURT IN THE CASE OF V.C. SHUKLA AND COMMON CAUSE (A REGISTERED SOCIETY) 30 I TJ 197 HAS HELD THAT INDEPENDENT EVIDENCE IS NECESSARY AS TO THE TRUSTWORTHINESS OF THOSE ENTRIES WHICH IS A REQUIRE MENT TO FASTEN THE LIABILITY. IT IS ALSO HELD THAT MEANING OF ACCO UNT BOOKS WOULD BE SPIRAL NOTE BOOK/PAD BUT NOT LOOSE SHEETS. IN THE INSTANT CASE, THE ALLEGED SEIZED DOCUMENTS ON THE BASIS OF WHICH DISALLOWANCE OF BOGUS SALARY HAS BEEN MADE ARE MERELY LOOSE SHEE TS WHICH ARE NOT CORROBORATED ANY OTHER EVIDENCE TO PROVE THE CO NTENTS OF SUCH LOOSE PAPERS. WE, ACCORDINGLY ARE OF THE CONSIDERED VIEW THAT LD. CIT(A) ERRED IN SUSTAINING THE DISALLOWANCE OF BOGU S SALARY OF RS. 20,48,173/- AND THE SAME DESERVES TO BE SET ASIDE. GROUND NO.3 RAISED BY THE ASSESSEE IS ALLOWED. 28. APROPOS TO GROUND NO.4 & 5 RELATES TO ALLEGED P AYMENT OF RS. 5,61,877/- TO MR. VIJAY HARIRAMANI, (ONE OF THE TR USTEES) BASED SHRI JAIRAM EDUCATION SOCIETY ITA NO.90 & 548/IND/2019 62 ON THE SEIZED LOSS SHEET AND VIOLATION OF PROVISION S OF SECTION 13(1)(C) OF THE ACT. ASSESSEE HAS ALSO CHALLENGED T HAT BOTH THE LOWER AUTHORITIES ERRED IN DENYING EXEMPTION CLAIME D U/S 11 & 12 OF THE ACT BASED ON THE OBSERVATION THAT THE PAYMEN T OF RS.5,61,877/- HAS BEEN MADE TO THE TRUSTEES FROM TH E FUNDS OF THE SOCIETY. 28A. WE FIND THAT IN THE ALLEGED LOOSE SHEETS PLACE D AT PAGE 9 OF ASSESSMENT ORDER THERE IS A SUMMARY OF TRANSACTIONS FOR THE PERIOD 01.04.2009 TO 30.06.2010 INCLUDING CONSOLIDA TED FIGURES FOR ASSETS EXPENSES, LIABILITIES SOURCE OF FUNDS ET C. IN THE LAST LINE OF THE SHEET IS MENTIONED THAT SHORTAGE OF CASH, (VIJAY SIR) AS ON 30.06.2010 AND AN AMOUNT OF RS.5,61,877/- IS MENTIONED AGAINST IT. PRIMA FACIE , IT SEEMS THAT THE ALLEGED FIGURE OF RS.5,61,877/- IS LINKED TO VIJAY SIR AND THE DATE I S 30 TH JUNE 2010 WHICH FALLS UNDER THE A.Y. 2011-12. HOWEVER, LD. AO HAS MADE THE ADDITION FOR A.Y. 2010-11. THIS FACT IN ITSELF PROVES THAT THE ACTION OF THE LD. AO OF MAKING ADDITION DURING A.Y. 2010-11 WAS WRONG. ALSO IT IS EVIDENT FROM THE ASSESSMENT ORDER THAT THIS PARTICULAR ISSUE PLACED AT PAGE 9 OF THE ASSESSMENT ORDER, THERE ARE VARIOUS OTHER ITEMS WITH FIGURES MENTIONED IN F RONT OF THEM. LD. AO HAD NOT MADE ANY COMMENT NOR MADE ANY EFFORT S TO SHRI JAIRAM EDUCATION SOCIETY ITA NO.90 & 548/IND/2019 63 EXAMINE THE CORRECTNESS OF THESE FIGURES, LD. AO HA S MERELY PICKED UP SOME FIGURES AS PER HIS COMFORT WHICH SHO WS THAT EITHER THE REMAINING ENTRIES ARE NOT MATERIAL OR TH EY ARE MERELY ROUGH JOTTINGS. IT IS ALSO NOT PROVED THAT MR. VIJA Y HARIRAMANI HAS TAKEN MONEY BECAUSE IN THE ALLEGED LOOSE SHEETS ONL Y SAYS SHORTAGE OF CASH WITH MENTIONED TO VIJAY SIR. IT NO WHERE INDICATES THAT THE ALLEGED SUM OF RS. 5,61,877/- HAS BEEN TAK EN BY MR. VIJAY HARIRAMANI FROM THE SOCIETY. UNDER THESE GIVE N FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE VIEW THAT THE ALLEGED ADDITION OF RS.5,61,877/- HAS BEEN MADE BY THE LD. AO MERELY ON SURMISES AND CONJECTURES WHICH DESERVES TO BE DELE TED. WE ACCORDINGLY ORDER SO AND SET ASIDE THE FINDING OF L D. CIT(A) PERTAINING TO THIS ISSUE AND DELETE THE ADDITION OF RS. 5,61,877/- AND ALLOW GROUND NO.4 & 5 RAISED BY THE ASSESSEE. 29.APROPOS TO GROUND NO.6 PERTAINING TO ADDITION OF RS. 8,47,694/- FOR SUPPRESSED UNRECORDED FEES, WE FIND THAT LD. AO BASED ON LOOSE SHEETS SEIZED DURING THE SEARCH, COP Y OF WHICH IS PLACED AT PAGE 12 OF THE ASSESSMENT ORDER, CAME TO CONCLUSION THAT THE SOCIETY HAS SUPPRESSED ITS INCOME RECEIVE D FROM FEES COLLECTION TO THE TUNE OF RS. 69,70,505/-. TO ARRIV E AT THIS FIGURE LD.AO REDUCED THE FEES COLLECTION OF RS.1,96,50,938/-SHO WN IN THE SHRI JAIRAM EDUCATION SOCIETY ITA NO.90 & 548/IND/2019 64 INCOME AND EXPENDITURE ACCOUNT AGAINST FEES OF RS. 2,66,21,443/- APPEARING IN THE ALLEGED LOOSE SHEETS. THEREAFTER W HEN THE MATTER TRAVELLED BEFORE LD. CIT(A), HE SUSTAINED THE ADDIT ION OF RS. 8,47,694/- OBSERVING AS FOLLOWS:- GROUND NO.7: THROUGH THIS GROUND OF APPEAL THE APPE LLANT HAS CHALLENGED THE ADDITION OF RS.69,70,505/- ON ACCOUN T OF SUPPRESSION OF FEES. THE AO MADE THE ADDITION BY ADOPTING THE FEES COLLECTION AT RS.2,66,21,443/- INSTEAD OF RS.1,96,50,938/-. A PER THE INCOME AND EXPENDITURE THE TOTAL FEES COLLECTION OF THE APPELL ANT IS AT RS.1,96,50,938/- FROM THE FIGURES OF LOOSE PAPERS. THE ACTUAL RECEIPTS COMES AT RS.2,57,73,749/- INSTEAD TO RS. 2,66,21,44 3/- AS ADOPTED BY AO. THE ACTUAL RECEIPT OF THE APPELLANT IS AS UNDER :- PARTICULAR AMOUNT TUITION FEE & DEVELOPMENT FEE 19012937 ALLIED FEES 57250 OTHER INCOME 174900 BUS RECEIPTS 2781375 HOSTEL FEES 21000 ADVANCE FEES AS ON 31.03.2010 6325612 LESS: OPENING ADVANCE FEES AS ON 31.03.2009 2930825 3394787 CAUTION MONEY AS ON 31.3.2010 694500 LESS: OPENING CAUTION MONEY AS ON 31.3.2009 363000 331500 25773749 THEREFORE, THE DIFFERENCE COME AT RS.847694/-(RS.2, 66,21,443- RS.2,57,73,749). THEREFORE THE ADDITION MADE BY AO TO THE EXTENT OF RS.8,47,694/- IS CONFIRMED THE APPELLANT WILL GET R ELIEF OF RS.61,22,811/- . THEREFORE, THE APPEAL ON THIS GROUND IS PARTLY AL LOWED. 29A. FROM PERUSAL OF THE ALLEGED LOOSE SHEET WHICH IS NEITHER SIGNED NO THE AUTHOR OF IT IS KNOWN WE OBSERVE THAT SOME JOTTINGS OF FEES COLLECTION, MAJOR EXPENSES, BANK LOAN, UNSE CURED LOAN, ASSETS ARE WRITTEN. PRIMA FACIE , IT LOOKS TO BE A SOME ESTIMATE OR SHRI JAIRAM EDUCATION SOCIETY ITA NO.90 & 548/IND/2019 65 PROJECTION OR ROUGH JOTTINGS WHICH MAY HAVE BEEN CA RRIED OUT AT ANY PARTICULAR TIME. IT IN ITSELF INDICATES THAT TH IS SHEET IS A DUMB DOCUMENT/ROUGH JOTTINGS WHICH CANNOT BE CORRELATED TO THE ACTUAL FIGURES FOR F.Y. 2009-10, IN VIEW OF THE JUDGMENT O F HON'BLE SUPREME COURT IN THE CASE OF V.C. SHUKLA AND COMMON CAUSE (SUPRA). S UCH LOOSE SHEETS ARE NOT SIGNED AND AUTHOR OF SUCH SHEET IS NOT KNOWN. THE SAME CANNOT BE TREATED AS P ART OF THE REGULAR BOOKS OF ACCOUNTS OF ASSESSEE, THEREFORE, E NTRIES IN SUCH LOOSE SHEETS ARE IRRELEVANT. EVEN OTHERWISE THE LD. AO HAS TAKEN A PARTICULAR VERSION WHEREAS AS LD. CIT(A) HAS TAKEN ANOTHER VERSION WHICH RAISES DOUBTS ON THE CORRECTNESS OF T HE LOOSE SHEETS AND IT FURTHER LAYS EMPHASIS THAT THIS SHEETS IS ME RELY A ROUGH JOTTING. WE, THEREFORE, IN ABSENCE OF ANY CORROBORA TIVE EVIDENCE BROUGHT ON RECORD BY BOTH LOWER AUTHORITIES AND LD . CIT(DR) FIND NO JUSTIFICATION IN FINDING OF LD. CIT(A) SUSTAININ G THE ADDITION OF RS. 8,47,694/- ON ACCOUNT OF UNRECORDED FEES OF THE ASSESSEE AND THE SAME IS DIRECTED TO BE DELETED. THUS, GROUND NO .6 OF THE ASSESSEES APPEAL IS ALLOWED. 30. APROPOS TO GROUND NO.7 THROUGH WHICH THE ASSESS EE HAS CHALLENGED THE FINDING OF LD. CIT(A) NOT ALLOWING T HE DEDUCTION FOR CAPITAL EXPENDITURE OF RS. 3,25,76,619/- INCURRED T OWARDS SHRI JAIRAM EDUCATION SOCIETY ITA NO.90 & 548/IND/2019 66 APPLICATION OF INCOME. WE ARE OF THE VIEW THAT SIN CE WE HAVE ALREADY HELD THAT LD. PR. CIT ERRED IN CANCELLING T HE REGISTRATION OF THE ASSESSEE SOCIETY U/S 12AA(3) & 12AA(4) OF THE A CT, AND ALSO HELD THAT THE ASSESSEE IS NOT CARRYING OUT ANY BUSI NESS OR PROFESSION NOR IT IS FALLING UNDER THE PROVISO TO U/S 2(15) OF THE ACT. WE HAVE ALSO HELD THAT THE ASSESSEE IS A CHARI TABLE SOCIETY CARRYING OUT GENUINE ACTIVITIES FOR ITS CHARITABLE OBJECTS FALLING UNDER THE PROVISION OF SECTION 2(15) OF THE ACT AND IS THEREFORE ELIGIBLE FOR BENEFIT OF EXEMPTION U/S 11 & 12 OF TH E ACT. WE HAVE ALREADY HELD THAT THE LD. AO ERRED IN MAKING THE AD DITIONS FOR A.Y. 2010-11 ON THE BASIS OF LOOSE SHEETS AND ALL THESE DISALLOWANCE AND ADDITIONS HAVE ALREADY BEEN DELETED BY US. THER EFORE, UNDER THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE, THE ASSESSEE IS ELIGIBLE TO CLAIM THE DEDUCTION FOR CAPITAL EXPENDI TURE OF RS. 3,25,76,619/- U/S 11 & 12 OF THE ACT ON AN APPLICAT ION OF SOCIETIES FUND FOR CHARITABLE ACTIVITY. THUS RELEVA NT FINDING OF LD. CIT(A) IS SET ASIDE. GROUND NO.7 OF THE ASSESSEES APPEAL IS ALLOWED. 31.IN THE RESULT, APPEAL OF THE ASSESSEE IN ITANO.5 48/IND/2019 FOR A.Y. 2010-11 IS PARTLY ALLOWED. 32. IN THE RESULT, ASSESSEES APPEALS IN ITANO.90 & SHRI JAIRAM EDUCATION SOCIETY ITA NO.90 & 548/IND/2019 67 548/IND/2019 ARE PARTLY ALLOWED. THE ORDER PRONOUNCED AS PER RULE 34 OF ITAT RULES, 1963 ON 13.10.2021. SD/- SD/- (RAJPAL YADAV) (MANISH BORAD) VICE PRESIDENT ACCOUNTANT ME MBER / DATED : 13.10. 2021 PATEL/PS COPY TO: THE APPELLANT/RESPONDENT/CIT CONCERNED/CIT (A) CONCERNED/ DR, ITAT, INDORE/GUARD FILE. BY ORDER, ASSTT.REGISTRAR, I.T.A.T., INDORE